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Nomura Securities Upgrades Citrix Systems (CTXS) to Buy

January 31, 2014 7:02 AM EST Send to a Friend
Get Alerts CTXS Hot Sheet
Price: $70.57 +0.07%

Rating Summary:
    19 Buy, 14 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 10 | Down: 21 | New: 42
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Nomura Securities upgraded Citrix Systems (NASDAQ: CTXS) from Neutral to Buy with a price target of $70 following Q4 results. Analyst analyst Rick Sherlund said although it looks kind of bad, it's time to buy.

"We have been cautious on Citrix given concerns about the core desktop virtualization business and now growing competition from VMware, but the valuation suggests a favorable risk/reward," Sherlund comments. "Overall company revenue growth of 8% is coming largely from lower gross margin NetScaler, so the mix shift is creating some near-term margin pressure. Positives are that the stock sells for only 4.4X recurring maintenance and subscription revenues, approaching the level at which private equity could potentially get interested. We think the low valuation provides some downside protection and there are a number of things that could go right that are not likely reflected in the share price. The shares trade at 10.5x EV/uFCF on our 2014 estimate and at a P/E of 15.7x (ex-cash of $8.53 per share) and 4.4x TTM maintenance plus SaaS subscription revenues. We like the risk/reward. FY14E EPS at $2.87; FY15E EPS at $3.18."

For an analyst ratings summary and ratings history on Citrix Systems click here. For more ratings news on Citrix Systems click here.

Shares of Citrix Systems closed at $53.29 yesterday.




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