(CTXS) has a fantastic webinar platform that I find easy to use and
it's great how the GoToMeeting software loads quickly to your
desktop. Of course the company is also a leading provider of
virtualization software and networking and cloud computing
solutions to more than 230,000 organizations worldwide.
But the company's earning's profile and resultant stock performance
over the past year is another matter altogether. And they gave us
nothing to cheer about last week when they reported mixed financial
results for the fourth quarter of 2013.
While net income surpassed the Zacks Consensus Estimate, total
revenue missed the same. Following the results, management
significantly slashed its earnings per share projection for the
next quarter. Citrix shares gapped down 10% the next day not just
to a new 52-week nadir, but to lows under $52 not seen since August
Zacks Rank Warned Investors -- Last Week, and All Last
Wall Street analyst earnings estimate revisions the week before
this quarterly report pushed CTXS back down to a #4 Rank (Sell) on
January 25 warning investors 3 days before the event and giving
them a chance to exit at $59.
In fact, since July of 2012, CTXS has held a Zacks #3 Rank (Hold)
or worse, with many #4 (Sell) and #5 (Strong Sell) ratings. The
proprietary Price & Consensus chart below tells the tale of a
company in an earnings's decline that the stock followed from highs
above $80 to today's pause at 2.5 year lows.
When you can't do enough research on a company or industry
yourself, sometimes the Zacks Rank can tell you almost all you need
to know. That's because it is a quantitative measure of a company's
earnings momentum relative to the rest of the market.
What's Wrong With Citrix?
But sometimes you still want to understand what's driving a
particular company or industry up, or down. Here, from the January
3 Zacks Research Analyst report, are some of the technology trends
which might explain why Citrix analysts have been steadily
downgrading the company's growth outlook for over a year...
Several industry researchers have predicted that of all the
corporate desktop PCs, only a few will use virtualization in the
future due to costs associated with this technology. As a result,
the long-term growth of Citrix may face headwinds beyond 2013-2014.
The server virtualization market is intensely challenging and is
becoming more commoditized. Citrix has been steadily cutting the
prices of its XenServer product line and as a result, most of its
offerings are currently free. The company witnessed a relatively
slow conversion from free offering to paid-for-essential versions.
Citrix continue to face stiff competition from VMware. Acquisition
of Desktone by VMware will allow the company to offer DaaS through
its Cloud Hybrid Service. Moreover, Citrix's desktop platform faces
stiff competition from VMware's View product and Oracle's broad
Bottom line: The Zacks Rank will tell us when the earnings picture
shows any signs of a turnaround at Citrix. Until then, proceed
Kevin Cook is a Senior Stock Strategist for Zacks where he runs
Follow The Money
CITRIX SYS INC (CTXS): Free Stock Analysis
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