BTIG Sees Citrix Systems Facing New Challenges

Quarter In Review

The comments come as Citrix' second-quarter results beat Street estimates on the top and bottom line, and it announced the divestiture of the GoTo business.

The analyst said ARR growth of 30 percent to $200 million is a far cry from total FY16 estimated revenues of about $2.7 billion (ex GoTo).

Related Link: Stifel Nicolaus Downgrades Citrix Systems To Hold

"Growth in the former surely needs to accelerate quickly in order to adequately compensate for expected product license declines/ cannibalization. This next chapter represents another transition, and further clouds the current investment picture," Fishbein wrote in a note.

The operating margin topped Street expectations (28.4 percent versus 28.1 percent), and Fishbein expects Citrix to reach 30 percent FY17 margin target a year early.

A Word Of Warning

However, the analyst warned that "it looks as though the easy work is behind the company" given that the margin expanded by +550bps year-over-year on average over the past five quarters.

"We still expect 80-90bps annual expansion through FY18, but the juice looks to be largely squeezed already," Fishbein noted.

Fishbein has a Neutral rating on the stock, which is currently down 3.54 percent to $86.17 at time of writing.

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