Updated Research Report on Citrix - Analyst Blog

On Apr 8, 2014, we issued an updated research report on Citrix Systems Inc. CTXS. We believe that the global trend toward virtualization and cloud computing will facilitate Citrix to maintain its momentum in the long term. Further, the business fundamentals of Citrix remain intriguing as the corporate spending for IT is expected to rise globally.

Citrix has delivered positive earnings surprise in all four quarters last year, with an average beat of 7.58%. The company reported mixed financial results for the fourth quarter of fiscal 2013 with the bottom line beating the Zacks Consensus Estimate but the top line missing the same.

The desktop virtualization market is expected to accelerate in the near future. Currently, server virtualization has an addressable market size of approximately 35 million servers worldwide whereas desktop virtualization has the potential to impact more than 600 million desktop users in corporate environments alone. As a result, the company expects an 8–10% increase in revenues for first quarter and full-year 2014.

Citrix strengthened its position in the highly lucrative cloud-based data storage segment with the acquisition of ShareFile, a leading provider of secure, cloud-based data storage, sharing and collaboration solutions. ShareFile offers cloud solutions to companies of various types and sizes.

However, the global economy is still suffering from fluctuations and is not completely out of woods. Various geo-political concerns in the European and African countries have slowed the momentum of the economic recovery. This may make Citrix's near-term financials volatile. Any adverse macroeconomic situation may result in the slowdown of enterprise IT spending. Hence, the desktop virtualization market may evolve lesser than anticipated and Citrix may lose its market share sooner than expected.


Citrix Systems currently carries a Zacks Rank #3 (Hold).


Stocks That Warrant a Look

Other stocks worth considering in the Business Software & Services industry are Dealertrack Technologies, Inc. TRAK, MicroStrategy Inc. MSTR and Adobe Systems Inc. ADBE. Both Dealertrack and MicroStrategy carry a Zacks Rank #1 (Strong Buy) while Adobe carries a Zacks Rank #2 (Buy).