On Jan 3, we maintained our Neutral recommendation on
Citrix Systems Inc.
). The company reported mixed financial results for the third
quarter of 2013. The bottom line outpaced the Zacks Consensus
Estimate while the top line missed the same.
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Why the Reiteration?
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 innovative products that will facilitate business
flexibility, security and centralized management system.
NetScaler product suite remains the largest catalyst for the
Cloud Infrastructure and networking segment.
Citrix strengthened its position in the highly lucrative
cloud-based data storage segment after its acquisition of
ShareFile, a leading provider of secure, cloud-based data
storage, sharing and collaboration solutions. As per the company,
the personal cloud computing market is expected to become a
multi-billion dollar opportunity by 2015.
Moreover, the company has enhanced its mobile computing platform
by offering Citrix Worx App Gallery with more than 100 apps from
third-party developers. The Worx App Gallery reduces the need for
IT administrators as it is managed by Citrix XenMobile that
offers complete security and better corporate usage.
On the flip side, the global economy is still suffering from
fluctuations and we are not completely out of 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. Any adverse macroeconomic
situation may result in the slowdown of enterprise IT spending.
Hence, the desktop virtualization market may evolve less than
anticipated and Citrix may lose its market share more quickly
than expected. During the reported quarter, geographically, total
net revenue dropped 2.4% from the preceding quarter.
Citrix provides software and equipment for streamlining business
computer systems. The demand for its products and services
depends substantially upon the general demand for
business-related computer appliances and software. Fluctuations
in the demand for these products and services could have an
adverse effect on the company's business, results of operations
and financial condition.
Citrix currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other stocks to consider in the Business Software & Services
ACI Worldwide, Inc.
GSE Systems Inc.
). All three carry a Zacks Rank #2 (Buy).