4 Opportunities That Could Write The Next Chapter Of Red Hat's Growth Story

Red Hat Inc

(NYSE:

)'s

earnings report came in better than expected on multiple fronts, including revenue, billings, margins and earnings per share, Wells Fargo's Siti Panigrahi commented in a research report. The analyst maintains an Outperform rating on

Red Hat's stock

with a price target boosted from $120 to $124 as the bullish case remains in place.

Revenue outperformance in the quarter can be attributed to ongoing momentum in the core RHEL segment along with an increase in cross-selling opportunities from emerging technologies and consulting services, Panigrahi noted. In addition, infrastructure-related subscription revenue grew 13.5 percent year-over-year and app development and emerging technologies saw a re-acceleration in revenue growth.

Overall, Red Hat's earnings report reinforces the fact that the company is well positioned to benefit from the secular trend in

hybrid cloud adoption

. But Red Hat's ultimate growth opportunity will come from:

Continued adoption of Red Hat Linux for mission-critical workloads.
Cross-selling opportunities from its emerging technology group to the large installed Linux base.
Expected demand for OpenStack-based hybrid cloud.
Large deal renewals expected to begin in the bottom half of fiscal 2018.

Bottom line, Red Hat "pioneered" the open-source model and dominates the Linux operating system market but now has "extended its success to a broad stack of technology for private cloud deployment."

At last check, shares of Red Hat were up 4.56 percent at $110.59.

______

Image Credit: By Harald Hoyer from Schwerin, Germany - Dripping, CC BY-SA 2.0, via Wikimedia Commons

Market News and Data brought to you by Benzinga APIs

4 Opportunities That Could Write The Next Chapter Of Red Hat's Growth Story

Comments