February 6, 2019

CTXS – Although management’s sentiment suggests the potential for near-term headwinds, market expectations are still too bearish, suggesting longer-term upside remains warranted

  • Citrix Systems, Inc. (CTXS:USA) currently trades near corporate averages relative to UAFRS-Based (Uniform) Earnings, with a 19.3x Uniform P/E. At these levels, markets are pricing in muted expectations for the firm, and while management has concerns about bookings growth, product innovation, and market headwinds, the firm’s leadership position in the space suggests this bearishness is unwarranted
  • Specifically, management may lack confidence in their ability to sustain bookings growth and SaaS revenue growth, and may be overstating the benefits of their incentive plan, share buybacks, and lower margin sales growth. Additionally, management may have concerns about cloud products and collaboration efforts with Microsoft Azure. Furthermore, management may be downplaying concerns about headwinds to hardware orders and subscription bookings, and may be concerned about their subscription businesses
  • However, even with potential near-term headwinds, CTXS’ leadership position, historical profitability trends, and core position around major developing areas suggest market expectations are overly bearish, warranting long-term upside
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