New Zealand markets close in 2 hours 50 minutes
  • NZX 50

    12,733.55
    +97.00 (+0.77%)
     
  • NZD/USD

    0.7158
    -0.0017 (-0.24%)
     
  • NZD/EUR

    0.5983
    -0.0004 (-0.07%)
     
  • ALL ORDS

    7,306.10
    -11.40 (-0.16%)
     
  • ASX 200

    7,043.10
    -15.50 (-0.22%)
     
  • OIL

    63.39
    -0.07 (-0.11%)
     
  • GOLD

    1,762.80
    -4.00 (-0.23%)
     
  • NASDAQ

    14,026.19
    +222.28 (+1.61%)
     
  • FTSE

    6,983.50
    +43.92 (+0.63%)
     
  • Dow Jones

    34,035.99
    +305.10 (+0.90%)
     
  • DAX

    15,255.33
    +46.18 (+0.30%)
     
  • Hang Seng

    28,852.69
    +59.55 (+0.21%)
     
  • NIKKEI 225

    29,698.64
    +55.95 (+0.19%)
     
  • NZD/JPY

    77.8530
    -0.1320 (-0.17%)
     

Red Hat shares up on acquisition and 3Q results

The Associated Press

Red Hat Inc.'s shares jumped Friday on the software company's solid third-quarter results and plans to acquire cloud-based software company ManageIQ.

THE SPARK: Red Hat said late Thursday that it would buy privately held ManageIQ for $104 million in cash.

The Raleigh, N.C., company also reported that it earned 29 cents per share for its fiscal third quarter on an adjusted basis, up a penny from the prior year and in line with analyst expectations. Its revenue for the period increased 18 percent to $343.6 million, which beats the $338 million that analysts polled by FactSet had forecast.

THE BIG PICTURE: ManageIQ's software helps businesses deploy and manage private clouds. Red Hat said the deal will expand the reach of its public-private cloud setups for its customers. The acquisition is expected to have no material impact to Red Hat's revenue for its fiscal year ending in February.

THE ANALYSIS: Stifel Nicolaus analyst Brad R. Reback said that the company has been able to maintain momentum even in a difficult environment and he thinks the latest deal offers an interesting longer-term angle for its business. He thinks the company is well positioned to generate at least 15 to 20 percent billings growth in the future. He reiterated a "Buy" rating and a $65 price target on its shares.

SHARE ACTION: Shares gained $2.25, or more than 4 percent, to $54.86 in afternoon trading. Shares have traded between $39.19 and $62.75 in the past 52 weeks.