Red Hat Shares Still Attractively Valued, Says Deutsche

Red Hat Inc RHT didn’t update fiscal year 2017 guidance at a recent analyst day attended by Deutsche Bank, but it did share its target of reaching $5 billion in revenues and a sustainable growth rate of 15 percent or more in the medium term.

Related Link: Citi Sees 24% Upside In Red Hat Shares

Red Hat’s cloud business was up 90 percent, but this wasn’t the emphasis during talks with analysts. Management seems to still be focused on a sort of hybrid view of products, a world of on-premise and cloud usage for its offerings.

Also of note for Deutsche Bank was the migration of several of Red Hat’s large customers from the legacy operating system to Linux. This is one factor Deutsche Bank analysts believe will help Red Hat grow despite difficult budget trends and in the face of competition from Amazon.com, Inc. AMZN's Amazon Web Services.

Deutsche reaffirmed its Buy rating on Red Hat with a target price of $95.

At time of writing, Red Hat was trading down 1.12 percent on the day at $71.79.