Red Hat Stock Poised to Break Out From Rounding Top

Red Hat, Inc. shares rose nearly 5% in after-hours trading on Monday after second quarter financial results surpassed analyst expectations. Since last week, the stock had moved about 3% lower as investors questioned the upcoming financial results, even after Barclays raised its price target from $105.00 to $120.00, citing hybrid cloud deployments as a strong tailwind. The downside movement created a bearish rounding top chart pattern.

During the second quarter, the company reported revenue that rose 20.5% to $723 million – beating consensus estimates by $23.55 million – while net income of 77 cents per share beat consensus estimates by 10 cents per share. The company’s full-year guidance also came in higher than expected at $2.88 billion to $2.89 billion in revenue with non-GAAP operating margins of 23.8% and diluted non-GAAP EPS of $2.77 to $2.79 per share. (See also: Red Hat: Why This Stock Is the Comeback Kid.)

Red Hat stock looked bearish into second quarter earnings, but solid results could send it to key resistance levels. …read more

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Category: RHT

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