Citrix Systems: Steady uptrend

Posted Oct 7th 2009 3:00PM by Joseph Lazzaro
Filed under: Stocks to Buy

Server/deskstop virtualization software solutions designer Citrix Systems (NASDAQ: CTXS) continues to advance, as expected, which is why I'm Reiterating my Buy rating for the company, first recommended on June 16, 2009 at a price of $33.09.

In June, the argument was made that U.S. information technology spending would not decline by the projected 5-7% in FY2009, and that institutional investors would also look past CTXS's flatish FY2009 revenue to a near 10% gain in FY2010, and that's pretty much what has transpired. Shares have risen about 19% since the June Buy recommendation. The First Call FY2009/FY2010 EPS estimates for CTXS are $1.64 to $1.88.

Further, CTXS's stock chart looks fantastic, technically: a steady uptrend, with minor, constructive pull-backs, and a price that continually stays above the 50-day moving average – a sign that institutional investors are adding to their CTXS positions.

CTXS's stock will face resistance in the $40-44 range, but assuming the U.S./global economic recoveries continue, those previous highs will be mounted.

Stock Analysis: Citrix Systems is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in CTXS now; then buy another 25% in three 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 December 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.

Tags: Citrix Systems, CTXS