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Will Citrix Systems (CTXS) Surprise Earnings Estimates in Q3?

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Citrix Systems, Inc.CTXS , a leading provider of virtualization, networking and cloud computing solutions in the U.S., is slated to report its third-quarter 2015 financial numbers on Oct 21, after the closing bell.

In the previous quarter, Citrix had reported a positive earnings surprise of 38.1%. Let's see how things are shaping up for this announcement.

Factors at Play

We believe the global trend toward virtualization and cloud computing will help Citrix retain its momentum in the upcoming quarter as well. Moreover, its products XenMobile and XenApps are gaining significant market traction in the highly lucrative enterprise mobility segment and Windows app virtualization space.

New product launches are significantly boosting Citrix's top line. Earlier in the year, the company launched Citrix Workspace Cloud, a new platform designed to simplify the on-demand delivery of a wide range of IT tools and services. We expect an update on its product portfolio at the third quarter conference call. For the third quarter of 2015, the company anticipates revenues in the band of $780 million to $790 million while earnings (on an adjusted basis) are expected in the 83-85 cents range.

We are also impressed by the company's focus to reward shareholders through buybacks. During the third quarter, the company authorized an additional $500 million share buyback plan.

Earnings Whispers

Our proven model does not conclusively show that Citrix is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP : Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Thus, the ESP for the company is currently 0.00% as the Most Accurate estimate is in line with the Zacks Consensus Estimate of 67 cents.

Zacks Rank : Citrix carries a Zacks Rank #3 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction inconclusive.

Note that Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Other Stocks to Consider

Here are some other companies for investors to consider, that according to our model, have the right combination of elements to post an earnings beat this quarter:

CenturyLink, Inc. CTL has an earnings ESP of +6.15% and a Zacks Rank #1.

Level 3 Communications Inc. LVLT has an earnings ESP of +2.17% and a Zacks Rank #3.

Qualys, Inc. QLYS has an earnings ESP of +6.15% and a Zacks Rank #2.

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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 Nasdaq, Inc.


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

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