Citrix Systems: Back Up the Truck

Posted Dec 17th 2009 5:30PM by Joseph Lazzaro
Filed under: Stocks to Buy

Need to buy another holiday gift to complete your list? Consider the gift of server/desktop virtualization software solutions designer Citrix Systems Inc. (CTXS), whose stock continues to advance, as expected. And it goes without saying that I'm reiterating my buy rating for the company's shares, first recommended on June 16, 2009 at a price of $33.09. If you bought CTXS in June, you're up about 18%.

In June, the argument was forwarded that U.S. information technology spending would not decline by the projected 5-7% in FY2009, and that institutional investors would hence look past CTXS's flat-ish FY2009 revenue to a likely, near 10% gain in FY2010, and that's pretty much what has transpired.

The Citrix buy recommendation is also based on the premise that, moving forward, demand regarding employees' ability to conduct business in remote/mobile locations will increase, and it's long-term, secular trend, to CTXS's benefit.

The First Call FY2009/FY2010 EPS estimates for CTXS are $1.66 to $1.87.

Technically, CTXS stock cleared $40 psychological resistance this fall, but still will face resistance at/near $44. Otherwise, the chart looks strong: a steady uptrend, with minor, constructive pull-backs, and a price that continually stays above the 50-day moving average -- which indicates institutional investors (IIs) are adding to/establishing positions.

Stock Analysis: Citrix Systems Inc. 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 one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your CTXS position before February 2010. Sell/Stop Loss if you were to buy shares in this company: $17.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: Citrix Systems, CTXS