Red Hat initiated with "sector perform" - update

09/25/07 - RBC Capital Markets

NEW YORK, September 25 (newratings.com) - Analysts at RBC Capital Markets initiate coverage of Red Hat Inc (RHT) with a "sector perform" rating. The target price is set to $22.

In a research note published this morning, the analyst mentions that the company’s value proposition and go-to-market model support robust revenue growth, profit margins and cash flow generation. The analysts add, however, that Red Hat would need to continue to take initiatives to ward off competition from existing and emerging software and system vendors of open source solutions and services. The company has reiterated its revenue, operating margin and non-GAAP EPS guidance for FY08 at $510-$520 million, 21%-22% and $0.67-$0.72, respectively.