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S&P 500   3,841.94
DOW   31,496.30
QQQ   308.68
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S&P 500   3,841.94
DOW   31,496.30
QQQ   308.68
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S&P 500   3,841.94
DOW   31,496.30
QQQ   308.68
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Citrix Systems (NASDAQ:CTXS) Poised To Grow In 2021, Shares Fall Anyway

Thursday, January 21, 2021 | Thomas Hughes
Citrix Systems (NASDAQ:CTXS) Poised To Grow In 2021, Shares Fall AnywayCitrix Systems Reports Solid Quarter, New Acquisition

Shares of Citrix Systems (NASDAQ:CTXS) are edging higher in the premarket session on a double-shot of good news. The company reports not only solid results for the Q4 and 2020 period but it also guided the coming year higher and announced an acquisition that will accelerate that growth far beyond the expectations. Citrix Systems, if you are not aware, is a cloud-based subscription SaaS company with what will soon be an end-to-end platform for linking all internal business operations.

Citrix Systems announced a definitive agreement to buy Wrike along with the Q4 release. Wrike is a complimentary cloud-based SaaS platform that will help Citrix give a more complete offering to its clients. The deal is worth $2.5 billion in cash the company expects to raise via new debt and existing capital. Cost related to the deal will be dilutive to net earnings in the 2021 calendar period but will lead to enhanced top-line growth this year and earnings in the following years. Wrike ended the calendar year with over $140 million in unaudited ARR and is expected to grow in excess of 30% in 2021.

Citrix Systems, The Q4 Results

Citrix Systems reported a good quarter but not one in which growth was present. The $810 million in revenue is flat on both a sequential and YOY basis and beat the consensus by 360 basis points. The revenue shows steady business, at least, but that is not the full story. The company says subscription ARR and SaaS ARR grew 62% and 39% YOY respectively pointing to solid growth in the coming year.

Moving down the report, the revenue strength carried through to the bottom line delivering better than expected results for both GAAP and adjusted earnings. The GAAP earnings of $0.89 beat by $0.08 while adjusted earnings of $1.46 beat by $0.12.

Looking forward, the company is expecting some weakness in the first quarter but that will quickly pass. Execs guided revenue in the range of $785 to $795 million versus the $790 consensus with EPS of $1.40 to $1.45 falling slightly short of the $1.48 target set by the analysts. Beyond that, subscription and service sales should pick up steadily and result in revenue of $3.33 to $3.36 billion or up about 4% and earnings of $6.20 to $6.40 versus the consensus targets of $3.33 billion in revenue and $6.34 billion in adjusted earnings.

Citrix Systems Dividend Is Still Safe

Citrix Systems is a budding dividend-growth stock with a relatively safe payout. The company stock is yielding about 1.12% with shares trading near $132 and there is a positive outlook for growth. The company is only paying out about 24% of its earnings which leaves ample room for increases, acquisitions, and the like. Looking at the balance sheet, the company is sitting on some debt already but the cash reserve is sitting near $900 million, debt coverage is high at 9X obligations, and FCF is only lightly levered.

The Technical Outlook: Citrix Systems Is Range-Bound

Citrix Systems has been range-bound for the last three quarters and may not break out of that range soon. The results, outlook, and acquisition are all bullish but not enough, not yet, to drive prices higher. Once the deal is done, sometime in the first half of the year, and the results are proven the stock may begin to move higher once again. Until then investors should expect price action to move sideways within its range with a bottom near $110 and a possible top near $145.

Citrix Systems (NASDAQ:CTXS) Poised To Grow In 2021, Shares Fall Anyway

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Citrix Systems (CTXS)2.1$135.47flat1.03%29.07Buy$159.54
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