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Citrix Analyst: 'Near-Term Pain For Long-Term Gain'

Jayson Derrick

Citrix Systems, Inc. (NASDAQ: CTXS) reported second-quarter results that fell notably short of the Street's estimates, but Wedbush says investors should accept "near-term pain for long-term gains."

The Analyst

Wedbush's Daniel Ives maintains a Neutral rating on Citrix Systems with a price target lowered from $100 to $95.

The Thesis

Citrix's transition to focus on a subscription model is progressing faster than expected across its major business units and this was evident in Wednesday's earnings report, Ives wrote in a note. Specifically, the company spent the past 18 months transitioning the company to better focus on cloud/subscription. During the second quarter management initially guided for cloud/subscription to represent 52% of the business but the actual number came in at 62%.

Ives said a shift towards a more visible business model is encouraging and the company deserves credit for its execution so far. In fact, the company offered a new metric ARR (annual recurring revenue), which will be a notable measure for the rest of 2019 and into next year to measure further improvements in the transition.

During the second quarter ARR was 33% higher year-over-year at $614 million and SaaS ARR was 50% higher year-over-year at $418 million.

View more earnings on CTXS

Ives said investors with plenty of patience may benefit from Citrix's stock as "all the pieces are generally in place" for its cloud transition. However, the near-term picture is clouded with uncertainty in the field.

Price Action

Shares of Citrix were trading lower by more than 5% at $95.63 Thursday afternoon.

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Latest Ratings for CTXS

Date Firm Action From To
Jul 2019 Maintains Underweight
Jun 2019 Upgrades Hold Buy
Jun 2019 Upgrades Hold Buy

View More Analyst Ratings for CTXS
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