This week the Valens Securities team highlights our most interesting equity insight from across our tools and our analysis.
Citrix Systems, Inc. (CTXS): Pessimistic market outlook for growth and ROA’, with growing management confidence about guidance and competitive positioning and positive fundamental momentum signal equity upside
CTXS is trading at a 16.5x V/E’, at the higher end of historical valuations, though a 5.3x V/A’ is around historical averages. The market is expecting the recent decline in ROA’ from 33.5% to 31.5% to persist, with ROA’ dropping to around 27%-28% levels going forward, with relatively modest Asset’ growth of 6% relative to their historical double-digit growth. However, with CTXS’ core position around major developing areas after the sale of the Go To business, including mobile and virtualization efforts for Enterprise, and around cloud initiatives, all areas where they have strong positions, they are seeing much stronger tailwinds than the market is recognizing.