Shares of Red Hat Inc (RHT.N) rose to their highest in five years after the business software maker reported a profit that beat analysts' expectations for the fifth straight quarter.
The stock of the world's largest distributor of the Linux operating system was up 14 percent at $58.67 after touching a high of $59.97 earlier in the session.
"Overall we remain bullish on the long-term outlook for Red Hat that includes several new products and realistic long term expectations," analysts at RBC Capital Markets wrote in a note to clients.
Brokerage Credit Agricole said the company is benefiting from the broad migration to cloud-related data center build-outs by enterprise customers, who are looking to build their own private or public clouds.
New products such as the RHEV 3.0 position Red Hat as a strong alternative to VMWare's (VMW.N) or Microsoft's (MSFT.O) virtual stack, Credit Agricole said in a note to clients.
The growing migration to cloud computing has been a key driver of revenue growth for Red Hat's Linux server software, as has expanding IT budgets after the recession years.
For the fourth quarter, the company posted billings growth of 31 percent, that outpaced its revenue growth for the fourth time in the past five quarters. It also announced a $300 million share buyback program.
Several analysts raised their price targets on the stock.
(Reporting by Siddharth Cavale in Bangalore; Editing by Supriya Kurane)