Earnings Preview: Citrix Systems

Citrix Systems (CTXS) is expected to report Q3 earnings after the market close on Wednesday, October 21, with a conference call scheduled for 4:45 pm ET.

Guidance

The consensus estimate is 41c for EPS and $400.07M for revenue, according to First Call. On July 22 Citrix reiterated guidance provided on their last earnings call expecting Q3 and FY09 revenues to be flat versus 2008.

Analyst Views

At that time several firms took the opportunity to downgraded Citrix shares on valuation, limited near-term catalysts, and the unlikelihood of a near-term take-out of the company. Then in October Jefferies upgraded Citrix to Hold from Underperform after their channel checks indicated IT spending will be strong in the second half of 2009. But Jefferies felt the stock was then fully valued. Think Equity's checks suggest that Citrix is likely to meet Q3 expectations and report revenue/EPS in line with consensus and their estimates of 41c on $398.2M in revenue, with modest potential for EPS upside driven by cost controls. While Think views XenApp, 63% of sales, as a discretionary spend, they believe expectations are conservative, and checks suggest low-single-digit sequential growth, which should support an in-line quarter. Think Equity's checks also suggest that Application Networking Federal activity was solid and that a strong virtual desktop, or VDI, continues to drive broad pilot activity. Based on the strong VDI platform and ecosystem, Think Equity believes Citrix is well positioned for this opportunity. Based on improving underlying trends, Think Equity expects Q4 guidance to be in line with expectations. Think's Q4 estimates are 52c on $423.9M in revenue, as consensus is 52c on $430.47M.