Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of

RALEIGH, N.C. – With Novell (Nasdaq: NOVL) and its SuSe Linux sold for $2.2 billion this week, just how much is highly profitable and Linux dominator Red Hat worth?

Too much for a bigger suitor – say IBM or Oracle – if someone is looking to buy, says one Wall Street analyst.

Red Hat (NYSE: RHT) shares rose 59 cents in after-hours trading Tuesday following an upgrade from Wall Street analyst firm Piper Jaffray. The buying sent RHT to $42.42, erasing a 1 percent drop during the day.

The Hatters are profitable and hot, with shares hitting a 52-week high of $43.79 on Nov. 10. How good a year has it been? The 52-week low for RHT is $25.92.

At Tuesday’s close, Red Hat’s market cap is an impressive $8 billion.

Speculation about a Red Hat buyout is often food for the rumor mill, but with the acquisition frenzy in tech these days, someone might pay a huge premium to dominate the growing Linux market place. Plus, Red Hat has plenty of cash.

Wall Street analyst Katherine Egbert of Jefferies & Co. visited Red Hat’s headquarters  last month and upped her target price for Red Hat to $48. Egbert is among the analysts who frequently discusses whether Red Hat could be a takeover target. She rates RHT as a “Buy.”

Piper Jaffray still sees upside in Red Hat’s numbers, setting a share target price of $50 and uping its rating to “Overweight” – in other words, buy – from “Neutral.”

“Research suggests potential future market share gains,” The Street noted.

Cowen & Co., meanwhile, initiated coverage of Red Hat with a “Neutral” rating. Analyst Gregg Moskowitz wonders just how much more Red Hat can grow in the enterprise server space – its sweet spot.

Barron’s pointed out that Moskowitz said Red Hat is trading at a “premium valuation” when comparing stock price to earnings and cash flow. While that stock price is good for stockholders, it probably makes Red Hat too rich for IBM, which is on an acquisition binge.

Read more from Barron’s here.

Following her visit, Egbert noted that “cloud computing” is where Red Hat is making a big play. If the “cloud” remains hot and Red Hat Enterprise Linux grows as a preferred cloud enabler, watch out.

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