Analyst Note| Dan Romanoff, CPA |
Narrow-moat Citrix Systems reported strong fourth-quarter results from nearly any angle. Guidance was in line for the year and perhaps slightly light for the quarter. Given management’s recent track record of reporting meaningful quarterly upside to guidance, we view the near-term outlook as conservative. The company is clearly benefiting from its long-time position as a remote work enabler in a period where companies around the world were dealing with shelter-in-place restrictions. We continue to share management’s view that it will still take some time for the world to return to normal working conditions and that increased remote work will be more normal going forward. Along those lines, Citrix announced the acquisition of Wrike, a leader in collaborative work management solutions that help remote teams operate more effectively. We remain generally inline with management’s long-term financial targets, but we think COVID-19 and the transition to the cloud make modelling challenging through 2021. We are raising our fair value estimate to $154 per share from $141 based mainly on rolling our model forward and we see the stock as undervalued.