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Red Hat shares fall after Raymond James downgrade

NEW YORK (AP) -- Shares of Red Hat Inc. fell Monday after a Raymond James analyst downgraded the software maker, citing worries about its growth prospects for this year.

THE SPARK: Michael Turits lowered his rating for Red Hat to "Market Perform" from "Outperform," saying that while he expects the company's fourth-quarter results to be in line with expectations, investors may find its fiscal 2014 revenue guidance disappointing.

THE BIG PICTURE: Raleigh, N.C.-based Red Hat Inc. sells the Linux open source operating system.

Recently it tried to boost growth by expanding its offerings outside of that system to areas such as storage and cloud computing through various acquisitions.

Over the past year the company's shares have fluctuated significantly, losing about 4 percent of their value.

THE ANALYSIS: Turits said he thinks the risk of a slow-down in Linux growth is increasing. At the same time, just how much of a boost Red Hat will get from its non-Linux businesses remains to be seen.

The analyst noted that a year ago Red Hat issued a better-than-expected fiscal year revenue growth prediction. But given the risks surrounding the company now, he thinks it's more likely that Red Hat's 2014 outlook will bracket Wall Street predictions, rather than exceed them.

THE SHARES: Down $2.75, or 5.4 percent, to $48.05 in morning trading, after peaking at $50.09 earlier in the day. Over the past 52 weeks, the stock has traded between $46.34 and $62.75.