Prudential Upgrades Red Hat

Analyst Brent Thill sees the company as the leader in one of the fastest-growing segments of the enterprise software market

Prudential upgraded Red Hat (RHAT ) to overweight from neutral.

Analyst Brent Thill says Red Hat is the leader in Linux, which is among the fastest-growing segments of the enterprise software market. He notes we're still in the early innings of adoption by major companies.

He says the stock price sufficiently discounts concerns that have kept him on sidelines over the past six months -- ASP declines, management changes, and shifts in the competitive landscape. He says his field checks remain solid. Thill spoke with a household financial services firm that's rolling out 50 to 60 new Linux projects on Red Hat per month.

He sees 27 cents fiscal 2005 (Feb.) earnings per share, and trims his 37 cents fiscal 2006 to 36 cents. Thill has a $17 target.