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Citrix (CTXS) Hits 52-Week High: What's Behind the Rally?

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Shares of Citrix Systems Inc. rallied to a new 52-week high of $98.60 on Apr 18, closing marginally lower at $98.22. Notably, the company has a market capital of $13.28 billion.

The company’s shares have returned 11.7% year to date outperforming the 11.5% rally of the industry it belongs to. The momentum can be attributed to rapid adoption of its robust product portfolio and acquisition synergies.

Further, Citrix exhibits an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, recording a positive average earnings surprise of 7.1%.

Over the last 60 days, fiscal 2018 estimates were revised upward, resulting in the Zacks Consensus Estimate rising from $4.85 to $4.87 per share.

Impressive Q4 Performance

Citrix delivered better-than-expected earnings and revenues in the fourth quarter of 2017. The cloud computing company’s earnings (excluding $3.59 from non-recurring items) came in at $1.66 per share, above the Zacks Consensus Estimate of $1.60. The bottom line also increased 3.1% from the year-ago figure.

Net revenues came in at $777.9 million, marginally higher than the Zacks Consensus Estimate of $777.6 million.

License updates and maintenance revenues totaled $427.2 million, up 4.4% year over year. The company generated 58.8% of total revenues from its License Updates and Maintenance segment in 2017.

Notably, software-as-a-Service (“SaaS”) mix, which is gaining traction, generated revenues of $49.71 million surged 37.6% from the prior-year quarter.

Moreover, in a customer-friendly move, Citrix acquired web monitoring company Cedexis, with view to enhance company’s networking portfolio. The buyout boosts Citrix’s ability to support enterprise customers as far as their adoption of cloud IT infrastructure is concerned.

Citrix had completed the spin-off and merger of its GoTo business with LogMeIn last year aimed at improving its efficiencies.

Expanding Foothold in Cloud Security Solutions

“Citrix Ready” program aids customers to identify third-party solutions which are functioned to enhance networking, virtualization and cloud computing solutions. Morphisec’s Endpoint Threat Prevention was recently verified as Citrix Ready. Citrix customers will benefit from Morphisec’s end-to-end secured Virtual Desktop Infrastructure (“VDI”) environment.

Recently, New Citrix Analytics Service unveiled solutions to target phishing attacks and data loss by effectively identifying threats and malicious behavior.

Per a recent report by Gartner, the cloud based security services market is anticipated to reach $8.9 billion by 2020 from $5.9 billion in 2017. The report reinforces the company’s prospects going forward.

Zacks Rank & Other Key Picks

Citrix carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are Western Digital (WDC - Free Report) , Mellanox and Micron (MU - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The projected earnings growth rate (3-5 years) for Western Digital, Mellanox and Micron are 19%, 15% and 10%, respectively.

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