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Still Neutral on Citrix

On Jan 3, we maintained our Neutral recommendation on Citrix Systems Inc. (CTXS). 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.

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 industry are ACI Worldwide, Inc. (ACIW), Datawatch Corporation (DWCH) and GSE Systems Inc. (GVP). All three carry a Zacks Rank #2 (Buy).

Read the Full Research Report on CTXS
Read the Full Research Report on ACIW
Read the Full Research Report on GVP
Read the Full Research Report on DWCH

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