Citrix Systems, Inc. (NASDAQ:CTXS) just released its latest second-quarter results and things are looking bullish. Citrix Systems beat earnings, with revenues hitting US$799m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 16%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following last week's earnings report, Citrix Systems' 16 analysts are forecasting 2020 revenues to be US$3.21b, approximately in line with the last 12 months. Statutory earnings per share are expected to dive 39% to US$3.75 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$3.17b and earnings per share (EPS) of US$3.92 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 8.7% to US$163, suggesting the revised estimates are not indicative of a weaker long-term future for the business. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Citrix Systems analyst has a price target of US$195 per share, while the most pessimistic values it at US$135. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Citrix Systems' revenue growth will slow down substantially, with revenues next year expected to grow 0.2%, compared to a historical growth rate of 0.6% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Citrix Systems.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Citrix Systems. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Citrix Systems' revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Citrix Systems going out to 2024, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for Citrix Systems that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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