Gauging Citrix Systems’ Newly Added Risk Factors

Citrix Systems (CTXS) provides digital workspace solutions. Companies use its technology to enable their staff to work remotely in a secure environment.

Citrix acquired Wrike to better serve its customers with cloud-based solutions. It also has a strategic partnership with Google (GOOGL) on hybrid work solutions for enterprise customers. Citrix has recently added new customers, including ABAG Group and India’s furniture manufacturer Nilkamal Limited.

With this in mind, we used TipRanks to take a look at the newly added risk factors for Citrix. (See Analysts’ Top Stocks on TipRanks)

Q3 Financial Results

Citrix reported revenue of $778 million for Q3 2021 against $767 million in the same quarter last year, and surpassed the consensus estimate of $772.8 million. It posted adjusted EPS of $1.20, beating the consensus estimate of $0.89.

The company ended Q3 with $428.6 million in cash. It plans to distribute a quarterly dividend of $0.37 per share on December 21.

Risk Factors

Citrix carries 39 risk factors, according to the new TipRanks Risk Factors tool. It recently updated its risk profile with four new risk factors.

The company has cautioned investors that the integration of Wrike may face difficulties. As a result, Citrix may fail to fully achieve the anticipated benefits of the acquisition.

Citrix plans to release a margin improvement program in Q4 2021. It has cautioned investors that the changes it may undertake could result in the loss of some employees or adversely impact their morale. It goes on to warn that the margin improvement program may fail to deliver the targeted benefits or the benefits may be unsustainable over the long term.

In July, Citrix announced plans to restructure its sales organization, in part to accelerate the adoption of its cloud solutions. The company has told investors that the changes are significant and may cause disruptions to its operations.

The company has informed investors that it has been trying to get customers to purchase long-term on-premise subscription licenses. However, some customers are choosing short-term licenses and it cautions that this may adversely affect its operating results.

Most of Citrix’s risk factors come under the Finance and Corporate category, with 33% of the total risks. That is below the sector average of 44%.

Wall Street’s Take

Following Citrix’s Q3 earnings report, Morgan Stanley analyst Sanjit Singh downgraded Citrix stock rating to a Sell from a Hold. The analyst further lowered the stock’s price target to $85 from $90. Singh’s reduced price target suggests 5.3% downside potential. The analyst mentioned Citrix’s plan to improve margin and cited increased near-term uncertainty for the downgrade.

Consensus among analysts is a Hold based on one Buy, five Holds, and two Sells. The average Citrix Systems price target of $101.57 implies 13.2% upside potential to current levels.

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