Why Red Hat (RH) Stock Is Climbing Today

NEW YORK (TheStreet) -- Red Hat (RHT) shares are spiking, up 4.5% to $55.50 on Thursday, after beating analysts first quarter earnings expectations and agreeing to purchase eNovance yesterday.

The open source software solutions provider reported adjusted earnings of 34 cents per diluted share, beating analysts expectations by one cent, and a 17% year over year quarterly revenue increase to $423.8 million.

The company also announced that it was purchasing the privately held eNovance company for $95 million in cash and stock options in an effort to expand its capabilities in OpenStack technology.

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TheStreet Ratings team rates RED HAT INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate RED HAT INC (RHT) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. 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 and growth in earnings per share. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

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