Will Citrix Systems Attract Activist Investors?

In a report rolled out Thursday, analysts at Mizuho lowered their price target on shares of Citrix Systems, Inc. CTXS, from $75 to $70, while maintaining a Buy rating. The reduction came after the company announced preliminary fiscal first quarter financial figures well below consensus estimates and the own company's prior guidance, "as it had underestimated the impact of disruption from ongoing restructuring and FX." The analysts expect management to lower full-year guidance soon. The firm also updated its estimates to be below the current guidance. They now expect EPS of $3.48 for 2015, on revenue of $3.1967 billion; for 2016, they model EPS of $3.69, on revenue of $3.3323 billion. Mizuho thinks "management is likely to increase its focus on cutting expenses to improve margins while activist shareholders could also look at the stock favorably around the current level (…) Although 1Q disappointment is usually forgivable for any software company and usually creates a buying opportunity, we believe continued execution challenges for the last few years do make things difficult in this case. We believe CTXS has significant assets to attract activist shareholders who could call for the rationalization/likely sale of its assets." Using Tibco Software Inc. TIBX and Informatica Corporation's INFA multiples, the analysts think the stock could be worth between $75 and $100.