NEW YORK (TheStreet) -- Shares of Red Hat (RHT) - Get Report were rising 6.83% to $82.30 in early morning trading on Thursday after the company posted earnings and revenue for the fiscal 2017 second quarter that beat analysts' expectations.
Following yesterday's market close, Red Hat reported adjusted earnings of 55 cents per share, higher than Wall Street's estimated 54 cents per share.
Revenue for the quarter was $600 million and topped analysts' projections of $593.46 million.
For the full year, the Raleigh, NC-based software solutions provider said it anticipates earnings per share between $2.23 and $2.25 vs. its prior view of $2.19 per share to $2.23 per share.
Analysts are modeling earnings of $2.21 per share.
Red Hat raised its revenue outlook to $2.415 billion to $2.435 billion, higher than prior guidance of $2.38 billion to $2.42 billion. Wall Street expects revenue of $2.398 for the year.
KeyBanc upped its price target on the stock this morning to $90 from $88 following the report, reiterating an "overweight" rating.
"We view high-teens growth and a record number of large deals as a clear sign that the portfolio is quickly expanding beyond on-premise and Red Hat Enterprise Linux as the core portfolio remains healthy," the firm noted.
KeyBanc added that upside is in store for the second half of 2016 despite a lack of free cash flow expansion in the second quarter.
Separately, 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.
TheStreet Ratings rated this stock as a "buy" with a ratings score of B.
The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, growth in earnings per share and good cash flow from operations. We feel 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.
You can view the full analysis from the report here: RHT.Or, check out the latest technical analysis of Red Hat from Chris Versace and Bob Lang, who co-manage TheStreet's Trifecta Stocks model portfolio (subscription required following a free 14-day trial).