RALEIGH, N.C. – If you think the talk about Red Hat (NYSE: RHT) being bought by IBM (NYSE: IBM) or another larger competitor is hype and more of the same old story, think again. Red Hat stock is red hot. The Street senses action.

“A Hot Hat,” wrote Katherine Egbert at Jefferies & Company. She appears to be spot on.

Friday, the Hatters’ shares soared $1.74, or 9.6 percent, to close at $19.86. During the day, the share price actually hit $20.10 as Red Hat inched back toward its 52-week high of last spring at $24.54.

Why so hot? Well, Red Hat is in the black, is growing despite the soft global economy and has no real debt. Its market cap is $3.5 billion – a mere pittance if a bigger buyer were to launch a takeover. And Oracle’s recent buy of Sun Microsystems certainly has raised Red Hat’s profile.

Mark Murphy, a Piper Jaffray analyst, also recently wrote positively about Red Hat. He noted that more than 70 percent of 70 Red Hat customers he surveyed plan to add more Red Hat Enterprise Servers. Earlier this month, UBS analyst Heather Bellini also upped Red Hat to “buy” from hold, set a share value of $23, up from $16, and said the Hatters could be worth as much as $32 in a “takeout.”

Egbert, who follows Red Hat extremely closely, helped spark the latest surge with a report Friday that flat-out predicted IBM or someone else will buy the Raleigh-based and world’s largest developer of Linux software, solutions and services.

She recently upgraded Red Hat to a “buy” and in this new report upped the value of Red Hat shares to $21 from $18. Hard to believe that in November Red Hat sold at $7.50.

“Red Hat is one of the best growth stories in software,” Egbert wrote. “We believe the May quarter is progressing well, helped by Jboss, [government] spending and demand in financial services. Reiterate Buy and boost target to $21.”

She then asked, and answered: “Will Red Hat get bought? Yes, eventually. We believe it’s inevitable that Red Hat will be subsumed into a larger entity, probably IBM, given the strategic importance of RHEL with the data center and a potential infrastructure price war between Oracle and Microsoft.”

In her report, Egbert noted that she recently had spent time with Red Hat management as she mined data for her latest update.

“So far so good for May,” she wrote. “Our checks, away from recent marketing with management, indicate solid demand for RHEL and Jboss in this down economy. The company has recently added a dedicated Jboss sales team in the U.S. and the focus should help boost sales, especially as competitors raise prices. The company has also beefed up its govt salesforce. About 15% of Red Hat’s revenue worldwide comes from govt-related sources, we see growth in this vertical outstripping overall growth in FY10 due to stimulus-related spending.”

Noting the Oracle-Sun (maker of open source Solaris), Egbert added:

“It seems inevitable Oracle will favor Solaris. While Oracle has said publicly they will continue support of RHEL, there is a sense within Red Hat that an increased focus on Open Solaris over RHEL is inevitable, as Oracle seeks to protect the declining Solaris maintenance stream. We estimate that 1/3 of Red Hat’s new business comes from Unix-to-Linux migrations. The danger to Red Hat is that Oracle will offer customers attractive terms terms to stay on Solaris, potentially even paying them not to migrate."

Oracle’s Larry Ellison is no Red Hat fan anyway, as The Skinny has noted on many occasions.

Not everyone sees Red Hat being sold, however.

“Too expensive, and there’s little incentive for Red Hat’s board to approve a sellout deal,” wrote Anders Bylund at The Motley Fool last week. “The Linux field is hot, no question about it. But I’d be less surprised to see IBM or an ultrarich and very acquisitive Cisco (Nasdaq: CSCO) snap up rival Linux dealer Novell (Nasdaq: NOVL) for a song.”

If Novell is sold, however, wouldn’t that make Red Hat even a hotter target?