NEW YORK (TheStreet) -- Shares of Red Hat (RHT) - Get Red Hat, Inc. Report are increasing by 0.66% to $74.53 in pre-market trading on Thursday, as the stock was upgraded to "overweight" from "sector weight" at Pacific Crest.
The firm has a $88 price target on the Raleigh, NC-based software solutions company.
"Momentum remains solid in core Linux and middleware, emerging solutions are ramping, and we are increasingly confident that upside to free cash flow (FCF) estimates exist," the firm wrote in a note.
Red Hat is increasingly winning large deals because of the "strategic nature of its stack," which can provide standardization, cloud management, vendor lock-in mitigation and more agile application development across hybrid and public cloud infrastructures, Pacific Crest added.
Additionally, the company's application development, emerging solutions and certified cloud provider (CCP) will likely reach over 30% of subscription revenue in the next few quarters, the firm said.
Separately, TheStreet Ratings Team has a Buy rating with a score of B.
The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, growth in earnings per share and increase in net income.
The team believes its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: RHT