27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
As such, the rating on the shares has been lifted from Market Perform to Outperform and the price target bumped from $82.50 to $95.
At the time of writing, shares of Citrix Systems were rallying 4.17 percent to $80.02.
1. Underwhelming Consensus
Analyst Philip Winslow believes the consensus estimates do not properly reflect the timing and magnitude of the impact of the forced migration to Customer Success Service.
The analyst clarified that Citrix introduced in October 2016 Customer Success Service a series of tiered support offerings intended to replace its existing Citrix Software Maintenance and Subscription Advantage agreements.
The analyst estimates at least $242 million in incremental annualized recurring revenue from the migration of existing SA contracts to the higher-priced CSS versus the company's guidance of $200+ million.
Additionally, the analyst expects 70 percent of the incremental ARR to be recognized in 2017 and 2018, as opposed to the company's suggestion that the impact will roll in over three years.
As such, Winslow said his revenue, earnings per share and free cash flow forecasts are meaningfully higher than the consensus estimates, beginning in 2018.
See also: A Citrix Tale Of Spinoffs And Share Prices, Mergers And Market Moves2. Depressed Valuation
Wells Fargo Securities noted that Citrix shares were trading near their lowest cash flow multiple (10.2 times) since the financial crisis, which is at a 44-percent discount to the overall software industry. The firm pointed that it was the lowest discount at which the stock has traded in the last 10 years.
"We view a 12.9x multiple as appropriate given that we forecast Citrix's UFCF/share to grow at a five-year forward CAGR of 13.2%," the firm said.
Additionally, the firm said it views the downside risk as relatively limited, given the depressed valuation.
3. Balance Sheet Expansion Opportunity
The firm noted that Citrix currently has a gross-debt-to-adjusted EBITDA ratio of 1.48 times. By increasing the ratio to three times, the firm said the company can still sustain an investment grade rating and raise an additional $1.4 billion in debt.
The firm believes the company can use the incremental leverage, along with its existing cash balance, to return more capital to shareholders.
Related Link: What AWS Pinpoint Means For Vonage And Twilio _______Image Credit: Coolcaesar at the English language Wikipedia [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/)], via Wikimedia Commons
27% profits every 20 days?
This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.
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