Citrix Systems,
Inc.(NASDAQ:CTXS)’s stock plunged more than 5% and now there are concerns over
the revenue growth of the business software maker, which is likely to slow next
year as firms purchase fewer personal computers and pay for lesser upgrades to
the operating systems on the machines that they already possess.
Adam Holt, analyst at
Morgan Stanley cast a spotlight on the challenges that Citrix is experiencing
in a research report submitted on Monday. The report concluded that the firm’s
pipeline of deals will start to dry up the following year, making it more
difficult to generate the revenue to catalyst the stock prices higher. He
downgraded his rating on the shares to ‘equal weight’.
Will
CTXS Bounce Back After The Recent Slump? Find Out Here
Based in Fort
Lauderdale, Citrix did not immediately reply to requests for comments on
Monday.
Citrix specializes in ‘virtualization’
software, which happens to be one of the hottest trends in computing during the
past two years. The term refers to coding that helps in reducing the costs of
running data centers by enabling a single computer to work like multiple
machines. The increasing demand for virtualization software had increased the
stock price for Citrix by 34% this year before the sell-off on Monday.
The company’s revenue
had grown by 18% to $1.2 billion through the initial half of the year. The firm
earned $160 million in the first half of the year, up 3% from the same time
last year.
Holt predicts Citrix to
deliver solid figures through the remaining year before getting into trouble
next year. Commercial demand for personal computers seems to be fading amid
uncertainty about the economy and the rising popularity of cheaper tablet
computers. A few new PCs in data centers and offices usually mean lesser sales
for software makers like Citrix that serve the corporate market.
Holt trimmed his
projections for 2013 sales of Citrix’s software licenses and lowered hi price
target for the company’s stock from $90 to $85.
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