Ahead of the Bell: Red Hat shares fall premarket

Red Hat Inc. shares slipped in premarket trading Thursday despite relatively strong first-quarter results for the software maker. Some analysts pointed to the company's share price as reason to stay on the sidelines.

"The recent strong gains in the stock have resulted in a less attractive" valuation, Stifel Nicolaus analyst Todd Weller said in a note to investors. He kept a "Hold" rating on the stock.

Weller added that Red Hat's billings have proven volatile from quarter to quarter, making it difficult to call any improvement a trend.

Red Hat, which has fared relatively well through the downturn with its low-cost Linux software, has seen its share price surge 52 percent year-to-date.

Tim Klasell, an analyst with Thomas Weisel, said, "We think shares are fairly valued," in a note Thursday and reiterated a "Market Weight" rating.

Ahead of regular trading Thursday, the stock fell $1.23, or 6.1 percent, to $18.90.

Jefferies & Co. analyst Katherine Egbert, who has a "Buy" rating, took a more upbeat view, calling Red Hat "a beacon of light in a dreary environment." She raised her price target to $23 from $21.

Red Hat, based in Raleigh, N.C., reported a 7 percent jump in fiscal first-quarter profit Wednesday with sales up 11 percent. Both figures surpassed estimates by Wall Street analysts.