We reaffirm our long-term Neutral recommendation on
Citrix Systems Inc.
) as we believe the stock is currently fairly valued. The company
reported mixed financial results for the third quarter of 2012.
Though net income handily beat the Zacks Consensus Estimate,
revenue fell below the same. At present, Citrix is facing two
pronged problems like continuation of global macro-economic
headwinds, which slows the momentum of new license sales and
growing demand of tablets instead of PCs or notebooks.
Citrix has provided a weak financial outlook for the ensuing
fourth quarter. The stock price plummeted 26% in the last seven
months. Nevertheless, we believeglobal trends toward
virtualization and cloud computing will facilitate the company to
report strong resultsin the long term. In our view, business
fundamentals of Citrix remain intriguing as the global
virtualization market will continue to flourish in the near
At present, Citrix is concentrating on three broad markets:
Desktop virtualization, Web Collaboration & Cloud Computing,
and Application Networking. As desktop virtualization has become
the top priority for any IT set-up, Citrix is introducing newer
innovative products that will facilitate business flexibility,
security, and centralized management system. Citrix currently
commands over 31.5% global market share for the cloud-based
remote support services systems.
) is its closest competitor.
In third-quarter 2012, 42 deals exceeded $1 million including
47.6% of product mix for XenDesktop new licenses, in the desktop
virtualization segment. XenDesktop, currently accounted for more
than 54% of total product revenue. More than 3,000 new customers
purchased XenDesktop solutions in the second quarter, of which
153 transactions were for more than 1,000 seats, and 28
transactions were for more than 5,000 seats.
CITRIX SYS INC (CTXS): Free Stock Analysis
VMWARE INC-A (VMW): Free Stock Analysis
To read this article on Zacks.com click here.