Citrix Systems (CTXS) Down 10.7% Since Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Citrix Systems, Inc. CTXS. Shares have lost about 10.7% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Fourth Quarter Earnings

Citrix's adjusted earnings came in at $1.43 per share, beating the Zacks Consensus Estimate by 13.5%. Better-than-expected revenues contributed to the earnings beat. Earnings, however, declined 2.05% from the year-ago figure.

Operating Results

Net revenue came in at $908.4 million, up marginally on a year-over-year basis and also above the Zacks Consensus Estimate of $898.8 million. Gross margin (adjusted) was 86.4% in the quarter under review compared with 85.8% in the prior-year quarter. Quarterly operating margin (adjusted) was 35.2% compared with 31.6% in the prior-year quarter. As of Dec 31, 2016, deferred revenues grossed $1.81 billion compared with $1.65 billion a year ago.

During the fourth quarter of 2016, Citrix generated approximately $259 million of cash from operations compared with $282 million for the same quarter in 2015. Citrix, which is on track to sell its GoTo business to LogMeIn,  exited the quarter with $957 million in cash and cash equivalents well above the year-ago figure.

Revenues by Product Mix

Product and Licenses revenues grossed $255.3 million, down 9% year over year. License updates and maintenance revenues totaled $409.2 million, up 4% year over year. Software-as-a-Service (SaaS) revenues came in at $210 million, up 8% from the prior-year quarter. Professional Services revenues declined 8% to $33.9 million in the reported quarter.

Revenues by Geography

Net revenues in the Americas (both North & Latin America) decreased 1.2% year over year. While revenues in Europe, Africa and the Middle East region decreased by less than 1%, in the Asia-Pacific region it increased by less than 1% year over year.

Outlook for First-Quarter 2017

The company expects (excluding GoTo business) the net revenues in the band of $655 million to $665 million for the first quarter of 2017. Earnings per share (on an adjusted basis) are projected in the range of $0.93 to $0.95.

Outlook for 2017

The company expects (excluding GoTo business) net revenue in the band of $2.81 billion to $2.84 billion for 2017. Earnings per share (on an adjusted basis) are projected in the range of $4.60 to $4.65.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Citrix Systems, Inc. Price and Consensus

 

Citrix Systems, Inc. Price and Consensus | Citrix Systems, Inc. Quote

VGM Scores

At this time, Citrix Systems' stock has an average Growth Score of 'C', though its Momentum is doing a lot better with a 'A'.  The stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.

Zacks' style scores indicate that the company's stock is suitable for value, momentum and growth investors.

Outlook

The stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.

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