NEW YORK (TheStreet) -- Better days are coming for Red Hat (RHT) once the company reports earnings Wednesday.
Right now the company is a victim of lower expectations -- the market's, thanks to overreaction to weak guidance from the company.
Since reaching its 2014 high of $60.52 back in March, shares of the enterprise software giant have been in the red -- down nearly 10% in the last three months and 7% for the year to date, based on the closing price of $52.14 Monday.
But with so many new companies embracing Rad Hat's OpenStack standard, astute investors should buy the stock now. Red Hat should easily beat expectations when it reports fiscal 2015 first-quarter earnings results Wednesday.
I won't deny that Red Hat has seen better days. But the growth rate in the company's enterprise Linux solution is not as bad as initially perceived.
When you combine this with Red Hat's confidence in next year's adoption rate for OpenStack and its Cloud platforms, these shares should reach $60 in 12 months, if not sooner. Of the 30 analysts that cover the company, there is a median price target of $64.50. The highest price target is $74.
OpenStack is Red Hat's open-source software cloud computing platform, which is free and deployed as an infrastructure-as-a-service (IaaS) solution.
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