On Jul 10, 2014, we issued an updated research report on Citrix Systems Inc. (CTXS). We believe that the global trend toward virtualization and cloud computing will help Citrix maintain its favorable momentum over the long haul. Banking on these positives, the company raised its guidance for the next quarter as well as for fiscal 2014.
Citrix has delivered positive earnings surprises in all four quarters last year, with an average beat of 13.58%. Also, the company reported strong first-quarter 2014 financial results with both the top and the bottom line outpacing the Zacks Consensus Estimate.
The desktop virtualization market is expected to accelerate in the near future. Currently, server virtualization has an addressable market size of approximately 35 million servers worldwide whereas desktop virtualization has the potential to impact more than 600 million desktop users in corporate environments alone.
Citrix is continuously introducing innovative products that will facilitate business flexibility, security and centralized management system. In order to counter installation difficulties, Citrix has launched XenDesktop 7.5 suites. XenDesktop 7.5 is a cloud-ready platform that allows easy access of Windows apps and desktops from any console. At present, it is one of the most popular products with 360,000 users and has witnessed 50% year-over-year growth in demand. Moreover, an aggressive sales force for the XenMobile business has already created a $300 million pipeline for 2014.
With Cloud.com in its kitty, Citrix is now comfortably placed on par with the cloud computing software leader, VMware. Citrix has also become a strong competitor for Amazon.com Inc.’s (AMZN) web services software and Microsoft Corp.’s (MSFT) Windows Azure software. Separately, Citrix has teamed up with VMware to install NetScaler programs in networks allowing cloud administrators to incorporate program-based NetScaler services into application-based datacenters built on the latter’s virtualization platform. Furthermore, various industry researchers estimate that the global web conferencing market size may exceed $4 billion by 2014.
Citrix Systems currently carries a Zacks Rank #1 (Strong Buy). Another stock worth considering in the Business Software & Services industry is Autodesk, Inc. (ADSK) with a Zacks Rank #1 (Strong Buy).
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