Earnings Preview: Citrix Systems Inc - Analyst Blog
April 26 2011 - 7:30AM
Zacks
Citrix Systems
Inc. (CTXS) is scheduled to release its first quarter 2011
results on Wednesday, April 27, after the closing bell. The current
Zacks Consensus Estimate for the first quarter is pegged at 32
cents, representing an annualized growth of 3.47%.
With respect to earnings surprises
over the trailing four quarters, Citrix Systems has outperformed
the Zacks Consensus Estimate in all the three quarters except one
quarter where it missed the Zacks Consensus Estimate by 2 cents.
The average earnings surprise was a positive 10.07%, implying that
the company has outdone the Zacks Consensus Estimate by the same
magnitude during the same period.
Fourth Quarter
Recap
On January 26, 2011, Citrix Systems
reported its fourth quarter 2010 financial results. Quarterly net
revenue was approximately $529.7 million, up 17% year over year and
exceeded the Zacks Consensus Estimate of $508 million. GAAP net
income was $94.4 million or 49 cents per share compared with a net
income of $88.2 million or 47 cents per share in the prior-year
quarter. However, quarterly adjusted earnings per share (EPS) were
55 cents, significantly higher than the Zacks Consensus EPS
estimate of 48 cents.
Gross margin in the fourth quarter
of 2010 was 88% compared with 88.3% in the year-ago quarter.
Operating expenses in the reported quarter were around $353 million
versus $320.7 million in the prior-year quarter. Operating margin
in the reported quarter was 21.4% compared with 17.3% in the
prior-year quarter.
Agreement of Estimate
Revisions
In the last 30 days, out of the 13
analysts covering the stock, 2 analysts increased their EPS
estimate for the first quarter of 2011 while none reduced their
estimates. However, for the second quarter of fiscal 2011, out of
the 13 analysts covering the stock, none of the analysts revised
their estimates.
For fiscal 2011, in the last 30
days, out of the 14 analysts covering the stock, 1 analyst
increased its EPS estimate but none decreased their estimates.
Likewise, for fiscal 2012, out of the 13 analysts covering the
stock, 1 analyst increased its EPS estimate while none decreased
their EPS estimates.
Magnitude of Estimate
Revisions
During the last 30 days, the Zacks
Consensus Estimate was in line with the ongoing quarter and the
upcoming quarter estimate of 32 cents and 44 cents, respectively.
Similarly, for fiscal 2011 and 2012, the Zacks Consensus Estimates
were in line with the current estimates at $1.92 and $2.17,
respectively.
Earning
Surprises
In the previous quarter, Citrix
Systems reported EPS of 55 cents, which beat the Zacks Consensus
Estimate by 7 cents. The current Zacks Consensus Estimates for the
ongoing quarter reflects a 3.13% downside potential while the
upcoming quarter contains a 0.00% upside potential (essentially a
proxy for future earning surprises). Similarly, fiscal 2011 has a
0.52% downside potential while for 2012, the Zacks Consensus
Estimate reflects a 2.77% upside potential.
Our
Recommendation
Strong financial outlook along with
moderate economic recovery and increasing trend for globalization
will drive growth in our view. However, we believe Citrix is fairly
valued at current levels as the stock is presently trading at a
52-week high, leaving limited room for improvement. Moreover, stiff
competition from Vmware, Inc. (VMW) will act as a
headwind for the company going forward.
We, thus, maintain our long-term
Neutral recommendation for Citrix Systems. Currently, Citrix
Systems has a Zacks #3 Rank, implying a short-term Hold rating on
the stock.
CITRIX SYS INC (CTXS): Free Stock Analysis Report
VMWARE INC-A (VMW): Free Stock Analysis Report
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