Red Hat Shares Lower Following Q4 Results; Analysts Weigh In

Shares of enterprise software maker Red Hat Inc RHT were down more than 4 percent Wednesday after its fourth-quarter billings missed consensus view.

For the fourth quarter, billings grew 11 percent to $763.9 million, but came in below Street's $771.6 million.

However, the company's earnings of 52 cents a share and revenue of $543.5 million topped Street's consensus view of 47 cents and $535.97 million, respectively.

In addition, the company issued full-year guidance of $2.22–2.26 in non-GAAP EPS and $2.38 billion–$2.42 billion in revenue. The outlook also beat consensus expectations of $2.19 and $2.36 billion, respectively.

Following are the Wall Street's takes on Red Hat's results.

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Bank Of America Merrill Lynch: Neutral, PT $78 From $80

"RHT has executed well in the face of long-term (LT) secular shifts, including operating system and middleware disintermediation by the nascent containers and cloud respectively. We are taking the LT view, and believe that it might be difficult for Red Hat to maintain 20+ percent growth in the face of those secular shifts in software."

Morgan Stanley: Overweight, PT $80

"Q4 Billings of $764 million, up 13 percent in cc, was slightly below us/cons by ~1 percent partly reflecting a ramping cloud business and a YoY comp that was 400 bps more difficult. However, performance across several metrics in Q4 suggest underlying demand trends remain strong giving us confidence entering FY17."

JPMorgan: Overweight, PT $91

"Overall, Q4 depicted a consistent trajectory of the business with accelerating revenue growth and very strong cash flow guidance for next year. We reaffirm our thesis that Red Hat is capable of disrupting large swaths of the traditional infrastructure software market as global trust for open source software grows."

Citigroup: Buy, PT $90 From $79

"We continue to view RHT as well positioned for either macro softness, or if tech spend / macro can brush off weakness and continue secular growth. We view continued open source adoption, specifically Linux and JBoss share gains, as a sustainable multi-year tailwind."

"On the downside, we believe RHT can defend the bottom-line with reduced spending growth if macro trends worsen."

Credit Suisse: Outperform, PT $95

"We believe that the next phase of cloud growth will be driven by enterprise adoption of hybrid cloud. Given its expanding portfolio of products, Red Hat is well positioned to benefit from the growing adoption of OpenStack and the cloud computing trend."

Shares of Red Hat were recently seen down 4.35 percent at $72.42. They have dropped 12.5 percent this year.