Red Hat Set For Rising Margins
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Rick G. Sherlund of Goldman Sachs initiated coverage of Red Hat (nasdaq: RHAT - news - people ) with an "in-line" rating given the stock's high valuation premium.
The stock trades at 64 times the analyst's calendar 2006 earnings estimate of 39 cents per share, well above the broader software group median of 22 times estimated 2006 earnings.
Red Hat is expanding margins and growing at a much faster rate than the rest of the industry. Its Enterprise Linux (RHEL) platform has gained a leading market position and supports major hardware, database and applications systems.
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