Red Hat Attracts Admiring Glances but Still Slides

NEW YORK (TheStreet) -- Red Hat (RHT) beat Wall Street's fourth-quarter estimates, prompting analysts to highlight the software maker's growth potential. Weaker-than-expected guidance, however, weighed heavily on the stock during Friday trading.

Shares of Red Hat were off 4.72% at $53.49 on Friday.

The software maker earned 39 cents a share on revenue of $400 million, up from 36 cents a share and $348 million in the prior year's quarter. Analysts were looking for earnings of 37 cents a share and revenue of $399.92 million.

Speaking during a conference call to discuss the results, Red Hat CEO Jim Whitehurst noted that the company enjoyed a record number of deals over $1 billion during the quarter. The CEO cited demand for Red Hat's core platform and application development products, including its middleware offerings. Middleware is a form of software that links different computer programs.

BMO Capital Markets analyst Joel Fishbein raised his Red Hat price target to $64 from $62 on Thursday, noting that the company's billings growth was driven by strength across geographies, verticals and product lines. The analyst maintained his "outperform" rating on the company.

This sentiment was echoed by Evercore Partners analyst Kirk Materne. "Red Hat delivered a solid finish to FY14 with a strong billings quarter," he wrote. "We see RHT as a solid mid-teens grower with the potential for upside in 2H15 as RHEL 7 becomes generally available and OpenStack starts to more meaningfully contribute to billings." Materne maintained his $64 price target and "overweight" rating on Red Hat.

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