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Citrix Systems Analysts Have Mixed Response To Q1 Print

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Citrix Systems Analysts Have Mixed Response To Q1 Print

Citrix Systems, Inc. (NASDAQ: CTXS), which has been undergoing a complex transition to a cloud-based subscription model over the past 18 months, reported first-quarter results Wednesday that beat expectations. 

The Analysts

Wedbush’s Daniel Ives maintained a Neutral rating on Citrix Systems and reduced the price target from $110 to $100. 

Wells Fargo’s Philip Winslow reiterated an Outperform rating and $135 price target.

The Thesis 

Citrix reported first-quarter EPS of $1.27 on revenue of $719.1 million, higher than the consensus expectations of $1.19 and $707.8 million, respectively.

Although product and license revenue declined much more than expected — by 16 percent year-over-year versus consensus expectations of a 15.4-percent decline — subscription revenue grew 37.2 percent year-over-year, substantially higher than the 30.9-percent estimate.

The software giant guided to second-quarter revenue and EPS of $765-$775 million and $1.30-$1.35, respectively, while reiterating its full-year guidance of $3.080-$3.090 billion and $6. 

The second-quarter guidance was mixed, with continued hiccups in the networking business. This means the company will need to aggressively ramp performance in the coming quarters to meet its full-year guidance, Wedbush’s Ives said in a Thursday note.

Although Citrix has executed well and its transition to a cloud-based subscription model presents an incremental growth opportunity, the announcement of the sudden departure of CFO Drew Del Matto after only a year is concerning and could affect the company’s ability to achieve its targeted margin expansion in 2019 and beyond, the analyst said. 

Wells Fargo's Winslow said subscriptions represented 50 percent of total revenue in the first quarter and 62 percent of the Workspace product bookings, highlighting the continued success of the company’s transition to a subscription model.

The first-quarter results are indicative of high customer acceptance of Citrix's cloud-based offerings, the analyst said. The company’s targets of over 6-percent revenue growth, a 33-percent operating margin and FCFPS of more than $10 in 2022 are conservative, he said. 

Wells Fargo raised its revenue and EPS estimates for 2019 from $3.101 billion to $3.106 billion and from $6.01 to $6.02, respectively.

Price Action

Citrix stock was down more than 1 percent at $99.44 at the time of publication Thursday. 

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Photo via Wikimedia

Latest Ratings for CTXS

DateFirmActionFromTo
Oct 2019AssumesUnderperform
Jul 2019MaintainsUnderweight
Jun 2019UpgradesHoldBuy

View More Analyst Ratings for CTXS
View the Latest Analyst Ratings

Posted-In: Daniel IvesAnalyst Color Earnings News Guidance Price Target Reiteration Analyst Ratings Best of Benzinga

 

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