How Citrix Could Spinoff Its $3.4 Billion GoTo Division

• Citrix Systems, Inc. CTXS held its third quarter earnings call on October 21.
• In the event, management said its 2016 guidance and the results of its ongoing operational and strategic reviews would be made public in mid-November.
• In a report issued Monday, analysts at Credit Suisse shared some comments on the issue and reiterated their Outperform rating, while raising their target price to $100 from $95.

Regarding the upcoming announcement of the results of Citrix’s operational and strategic reviews and 2016 guidance, Credit Suisse analysts assured they expect: (1) the spin-off of the GoTo division and (2) additional operational changes, including the divestiture or shutdown of subscale businesses, aimed at further boosting margins.

The experts explained that the combination of these elements should drive substantial upside to the stock. Consequently, they decided to reiterate their Outperform rating and boost their target price by $5, to $100.

GoTo Got To Go

The report then went into more detail regarding the spin-out of the GoTo division. Besides ShareFile, the analysts believe there’s little synergy between Citrix Online and the remainder of Citrix's businesses.

Based on Credit Suisse’s statistical analysis of valuation relative to growth across the software industry (on top of a comparable analysis to LogMeIn), the experts believe a tax-free spin-out of the GoTo division could trade at an enterprise value of $3.4 billion -- or $20.79 per share, leaving the remaining Citrix parentco with an enterprise value of $9.6 billion, they concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.