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Citrix (CTXS) Reportedly Could Receive a Joint Takeover Bid

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Citrix Systems CTXS might receive a joint takeover bid from Vista Equity Partners and Elliot Investment Management, per a report from Bloomberg. Citing sources familiar with the matter, Bloomberg added that both Vista Equity Partners and Elliot Management are considering of floating a joint takeover proposal for Citrix.

Since the discussion is in the preliminary stages, the report added that the parties might not even go ahead with the bid. If the takeover bid goes ahead, Vista is expected to use its portfolio company Tibco as part of the deal, noted Bloomberg.

Following the news, shares of Citrix are up 9.2% in the premarket trading on Dec 21. On a year-to-date basis, shares of Citrix are down 35.7% compared with the industry’s growth of 33%. In the past year, shares have declined 37% against the S&P 500 index’s rally of 24.4%.

Citrix Systems, Inc. Price and Consensus

Citrix Systems, Inc. Price and Consensus
Citrix Systems, Inc. Price and Consensus

Citrix Systems, Inc. price-consensus-chart | Citrix Systems, Inc. Quote

What Ails Citrix?

Citrix’s performance is affected by the ongoing business transition to a subscription-based model. The transition is exerting pressure on Product and License revenues as well as Support and Services revenues.

A highly-leveraged balance sheet is an added concern for the company. As of Sep 30, 2021, the company’s cash and cash equivalents and investments stood at $464 million. The long-term debt at the end of the quarter was $3.325 billion.

Earlier this year, the company announced that it was undertaking various changes to its sales organization as well as processes and go-to-market strategies in the second half of 2021 to boost its software as a service (SaaS) operations.

Given the ongoing transition to the cloud and the negative impact of organizational changes, the company lowered its revenue outlook for the year. Revenues for 2021 are expected in the range of $3.19-$3.20 billion compared with the earlier guidance of $3.22 billion and $3.25 billion.

In September 2021, Bloomberg had reported that Citrix was holding discussions with its advisers to explore the company’s sale amid a dismal performance on the trading front. Citing sources related to the matter, the report further added that the company was exploring strategic alternatives after Elliot Investment Management bought a 10% stake in the company.

Citrix is likely to gain from solid adoption of unified digital workspace solutions amid the continuation of work from home as well as the hybrid work innovation. The buyout of Wrike also augurs well in the long haul.

Zacks Rank & Stocks to Consider

At present, Citrix currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Arrow Electronics ARW, Cirrus Logic CRUS and Alphabet GOOGL. All stocks sports a Zacks Rank #1 (Strong Buy), You can see the complete list of today’s Zacks #1 Rank stocks here.

For Arrow Electronics, the Zacks Consensus Estimate for 2021 earnings is pegged at $14.60 per share, up 8.1% in the past 60 days. The long-term earnings growth rate of the company is pegged at 27.4%.

Arrow Electronics’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 18.6%. Shares of the company have rallied 26.8% year to date.

The Zacks Consensus Estimate for Cirrus Logic's fiscal 2022 earnings is pegged at $5.37 per share, up 7.6% in the past 60 days. The long-term earnings growth rate of the company is pegged at 9.3%.

Cirrus Logics’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14.9%. Shares of the company have increased 7.9% year to date.

The Zacks Consensus Estimate for Alphabet’s 2021 earnings is pegged at $108.29 per share, up 6.3% in the past 60 days. The long-term earnings growth rate of the company is pegged at 25.8%.

Alphabet’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 41.5%. Shares of the company have surged 61.6% year to date.


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