UPDATE: Susquehanna Upgrades Red Hat On Stabilization

Red Hat (NYSE: RHT) saw its shares upgraded by Susquehanna to the equivalent of Buy on a stabilizing growth rate of its core product and increasing contributions from new offerings.

Red Hat, which provides open-source business software, is up four percent year to date, slightly underperforming the S&P 500.

J. Derrick Wood of Susquehanna said the shares "have really been stuck in a narrow range for two years" as revenue growth in its core enterprise Linux distribution system slowed.

Wood, in a note Friday, said the category is now stabilized at a 12 percent growth rate while beginning last quarter, revenue from new products related to middleware and storage have become significant.

Wood set a $71 target on the shares.

"Upside momentum is starting to re-emerge," Wood said. He expects new products will grow annually by 34 percent while the core Linus product stabilizes at 12 percent growth.

Red Hat traded recently at $58.26, up 0.24 percent.