Red Hat Receives a Buy from Drexel Hamilton

By George MacDonald

Drexel Hamilton analyst Brian White reiterated a Buy rating on Red Hat (NYSE: RHT) on November 4 and set a price target of $90. The company’s shares closed last Friday at $74.09.

White said, “Our 12-month price target of $90.00 for BUY-rated Red Hat is based on an enterprise-value-to-sales ratio of 7x our 2016 revenue projection. Red Hat has delivered attractive growth over the years with sales growing by 19% over the past five fiscal years and EPS increasing by 18%. Additionally, the company’s subscription-based model provides more visibility relative to a licensed-based model.”

Currently, the analyst consensus on Red Hat is Strong Buy and the average price target is $85.50, representing a 15.4% upside. In a report issued on November 3, Deutsche Bank also upgraded the stock to Buy with a $90 price target.

The company has a one year high of $84.44 and a one year low of $57.87. Currently, Red Hat has an average volume of 1.6M.

Unlike Drexel Hamilton`s latest rating, based on the recent corporate insider activity of 82 insiders, corporate insider sentiment is negative on the stock. Most recently, in January 2016, William S. Kaiser, a a Director at RHT sold 18,972 shares for a total of $1,520,606.

According to TipRanks.com, White is a 5-star analyst with an average return of 8.2% and a 55.1% success rate. White covers the Technology sector, focusing on stocks such as Qlik Technologies, Juniper Networks, and Amphenol Corp.

Red Hat Inc is a provider of open source software solutions, using a community-powered approach to develop and offer reliable and high-performing operating system, middleware, virtualization, storage and cloud technologies.