Banc of America keeps the neutral rating on Red Hat (RHAT).
Analyst Kirk Materne says he expects the company to generate enterprise subscriptions in line with guidance when it reports Sep. 20. The company will also name a new chief financial officer during its earnings conference call. He thinks the biggest risk to Red Hat is its potential decline in subscriber pricing. Accordingly, he trimmed the $205 million fiscal 2005 (Feb.) earnings per share estimate to $200 million, and cut the 27 cents earnings per share estimate to 26 cents. He sees 36 cents fiscal 2006 earnings per share on $305 million in revenue.
Materne also cut the $21 target to $16. Overall, he thinks Red Hat is still well positioned to show strong revenue and cash-flow growth, however, he thinks valuation is likely to remain in check until new a CFO is fully up and running.