Citrix Added to Goldman Sachs' Conviction List Ahead Of Analyst Day

SaaS provider Citrix Systems, Inc. CTXS was added to Goldman's America's Conviction List ahead of its Tuesday, May 8 analyst day. 

Goldman Sach's conviction list consists of Buy-rated stocks that are identified as possessing the best alpha generation opportunities. Alpha measures the performance of an instrument relative to the market's movement as a whole.

The Analyst

Analyst Heather Bellini maintained a Buy rating on Citrix and increased the price target from $117 to $122.

The price target revision is based on an updated analysis of the company's "CSS maintenance pricing uplift and transition to a more ratable revenue model through Citrix Cloud," the analyst said.

The Thesis

Ever since private equity interest in Citrix waned in mid-2017, sentiment toward the stock has been muted, Bellini said in a Monday note.

The company's free cash flow per share guidance of $7 per share for fiscal 2020 is easily achievable, she said. 

Citrix's analyst day is an opportunity to highlight "the strength of [the] transition" to Citrix Cloud, Bellini said. 

" ... We believe there is the potential for management to not only pull forward its $7 FCF/share target, but also give an additional FCF guidepost several years post its fiscal 2020 goal," the analyst said. 

Goldman's updated model assumes rapid acceleration in revenue and EPS growth after fiscal 202 and free cash flow per share growth of 16 percent in fiscal 2010, 16 percent in fiscal 2022 and 15 percent in fiscal 2023. 

The Price Action

Citrix shares have added about 17 percent year-to-date.

The stock was up 0.91 percent at $103.85 at the time of publication Tuesday. 

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Photo by Citrix Systems via Wikimedia.