Citrix Systems (CTXS) - Get Citrix Systems, Inc. Report shares slid Thursday, as analysts reacted negatively to the enterprise software company’s announcement that CEO David Henshall is exiting immediately.
The company hasn’t named a permanent replacement yet. It appointed Board Chairman Bob Calderoni, as interim CEO.
Citrix also forecast third-quarter revenue will hit the midpoint to high end of its previous range of $765 million to $775 million.
In September, Bloomberg reported that Citrix was thinking of looking for a buyer.
In response to the fresh news, Citigroup analyst Tyler Radke cut his rating to neutral from buy and slashed his price target to $114 from $140.
Citrix recently traded at $104.97, down 1%, on a day that the S&P 500 rose 1%.
Citrix shares finished the day off $1.75, or 1.65%, to end at $104.21.
“We see a much less appealing risk/reward with fewer near-term catalysts to the value-creation story and increasing competitive concerns,” Radke wrote in a commentary, according to Barron’s.
The CEO change indicates Citrix hasn’t found a buyer and may not be able to reach its long-term financial targets, he said.
Citrix has shifted its operations to the cloud at the same time as it tries to speed revenue growth and increase profit margins.
But when software companies redirect to the cloud, revenue growth generally slows down and profitability suffers, says Morgan Stanley analyst Sanjit Singh, according to Barron’s.
He rates Citrix equal weight with a $90 price target.
To be sure, not everyone was downbeat. Morningstar analyst Dan Romanoff puts fair value at $125 per share for the stock.
“We think this leadership transition will be smooth, as Calderoni has been on the board at Citrix since 2015, including as Executive Chairman or Chairman for that entire span, and served as the interim CEO for three months in late 2015,” he wrote Wednesday.
“Despite the revolving door, we think Citrix will be able to attract a high-caliber leader.”