Zacks_Analysts' Blog : Citrix Systems Remains Neutral - Analyst Blog

Citrix Systems Inc. (CTXS) declared strong financial results for the second quarter of 2011, beating the Zacks Consensus Estimates. Global trends toward virtualization and cloud computing are facilitating Citrix to report impressive results.

Management raised its financial forecast for full-year 2011. As a leading provider of enterprise software with desktop virtualization at its core, the company will benefit from the latest trend of globalization.

We believe the virtualization market will flourish in the near future with desktop virtualization as its central point. Moreover, the company’s major products such as XenDesktop, NetScaler, and Online Collaboration are generating huge revenue.

Citrix recently completed the acquisition of Cloud.com Inc., a leading developer of software infrastructure platform for cloud computing service providers. The CloudStack product suite of Cloud.com offers an open-source platform-as-a-serviceenvironment that enables the cloud service providers to deploy and manage scalable applications in simplistic and cost-effective way.

With Cloud.com in its kitty, Citrix is now comfortably placed at par with cloud computing software leader VMware Inc. (VMW). The company became a strong challenger for Amazon.com Inc.’s (AMZN) web services software and Microsoft Corp.’s (MSFT) Windows Azure software. Cloud.com has a solid list of clientele including Tata Communications Ltd. (TCL), KT Corp. (KT), Apple Inc. (AAPL), Nokia Corp. (NOK), Zynga Inc., GoDaddy.Inc., to name a few.

Nevertheless, ongoing global macro-economic fluctuations may hinder the recovery process of IT spending by several enterprises. Recent debt crisis in the U.S. and various European countries has slowed the momentum of economic recovery from recession.

We are still not out of the woods. This may make Citirix’s near-term financials volatile. We believe the company is fairly valued at present and thus reiterate our long-term Neutral recommendation on Citrix Systems.