We reaffirm our long-term Neutral recommendation on
Citrix Systems Inc.
). The company posted mixed financial results for the first
quarter of 2013. While net income marginally surpassed the Zacks
Consensus Estimate, revenues fell below the same.
Why Kept at Neutral?
The global economy is still suffering from fluctuations and we
are not completely out of the woods. Various geo-political
concerns in the European and African countries have slowed the
momentum of economic recovery. This may make Citrix's near-term
financials volatile. Management provided a weak financial
outlook.The company cited reduction in IT spending and delay of
orders as the primary reasons for this tepid guidance.
Nevertheless, we believe that the global trend toward
virtualization and cloud computing will facilitate Citrix to keep
up its momentum in the long term. In our view, business
fundamentals of the company remain intriguing as the corporate
spending for IT is expected to rise globally in the future. The
newly-launched XenMobile is gaining market traction in the highly
lucrative enterprise mobility segment.
Citrix is concentrating on three broad markets: Desktop
virtualization, Cloud Infrastructure and networking, and
Collaboration and sharing. As desktop virtualization has become
the top priority for any IT set-up, Citrix is continuously
introducing newer innovative products that will facilitate
business flexibility, security and centralized management
Meanwhile, the stock price has plummeted 28.5% in the last
year. We believe that Citrix is currently fairly valued. Citrix
is also taking several steps to expand globally and launch
various state-of-the-art products.
Other Stocks to Consider
Citrix Systems currently has a Zacks Rank #3 (Hold). Other
stocks in this industry worth a look are
Aspen Technology Inc.
). All these stocks currently have a Zacks Rank #1 (Strong
ASPEN TECH INC (AZPN): Free Stock Analysis
CITRIX SYS INC (CTXS): Free Stock Analysis
PEGASYSTEMS INC (PEGA): Free Stock Analysis
SAP AG ADR (SAP): Free Stock Analysis Report
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