In general, analysts see 8-12% revenue growth for Citrix in FY2009, aided by gains in license updates and services, and by firming results in new product and software purchases.
Further, the Street's tepid attitude toward CTXS has changed as the belief in a bottoming U.S./global recession has gained traction: institutional investors quickly bid-up shares to more than $34 from about $20 just a short two months ago, and Citrix's shares are now over-bought short-term, from a technical standpoint. Hence, a Buy of CTXS on a pull-back to $31-32 is recommended, if the stock gives investors the chance.
Is the increasing excitement regarding Citrix warranted? It is if U.S. information technology spending does not decline by the projected 5-7% in FY2009 A bottoming recession means that forecast is overly pessimistic; a protracted recession, realistic, the latter of which would quickly send CTXS tumbling back to the $25-range. The First Call FY2009/FY2010 EPS estimates for CTXS are $1.63 to $1.66.
Hence, CTXS is not for the squeamish, but given current U.S./international 'green shoots,' the view from here argues the risk/return is favorable for investors who can tolerate moderate risk.
Stock Analysis: Citrix Systems is a moderate-risk stock. Consider buying a 25% position in CTXS on a pull-back to $31-32; then buy another 25% in four months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your CTXS position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $17.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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