Citrix Systems Still in Neutral Zone - Analyst Blog

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Citrix Systems Inc. ( CTXS ) declared strong financial results for the fourth quarter of 2011, beating the Zacks Consensus Estimates. Global trends toward virtualization and cloud computing are facilitating Citrix to report impressive results. As a leading provider of enterprise software with desktop virtualization at its core, the company will benefit from the latest trend of globalization.

We believe the virtualization market will continue to flourish in the near future. Citrix's major products, including XenDesktop, NetScaler, and Online Collaboration are generating huge revenue. Management provided a solid financial outlook for 2012. Citrix's major competitor, VMware Inc. ( VMW ), provided a rosy outlook for 2012.

However, a slow moving global economy is a cause of concern, which may restrict enterprises to spend more on IT set up. Meanwhile, the stock price has soared more than 56% last year. We believe the company is fairly valued at present and thus reiterate our Neutral recommendation on Citrix Systems.


In the previous quarter, in the desktop virtualization segment, 45 deals exceeded $1 million including XenDesktop licenses. XenDesktop currently accounted for more than 50% of total product revenue. More than 2,700 new customers purchased XenDesktop solutions in the second quarter, of which 225 transactions were for more than 1,000 seats, 40 transactions were for more than 5,000 seats, and 10 transactions for over 10,000 seats. We believe Citrix can also capitalize on the growing demand for mobile computing since its software enables customers to remotely log in to desktops.

Nevertheless, some industry researchers have predicted that of all the corporate desktop PCs, only a few will use virtualization in future due to costs associated with this technology. As a result, long-term growth of Citrix may face hindrance beyond 2013-2014.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CTXS , VMW

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