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Red Hat stock hits 52-week high on strong earnings

The Associated Press

Shares of Red Hat Inc. soared to a 52-week high Friday, a day after the open-source software company reported strong fiscal third-quarter results.

THE SPARK: Red Hat said late Thursday that its net income jumped 49 percent on a 15 percent rise in revenue. Its earnings and revenue far exceeded Wall Street expectations.

THE BACKGROUND: The company, which is based in Raleigh, N.C., makes the Linux open-source operating system.

Red Hat said strong demand for its technologies helped boost results. Revenue rose at its subscription and its training and services business units.

ANALYSIS: Raymond James analyst Michael Turits said the company's strong results suggests a "steeper trajectory for billings growth this year than we expected." Turits raised his investment rating on Red Hat to "Outperform" from "Market Perform." An "Outperform" rating is equivalent to a "Buy."

SHARE ACTION: Up $8.28, or 16.9 percent, to $57.28 in afternoon trading. Earlier, Red Hat shares rose as high as $58.71, its highest level in about 16 months.