Why Citrix Systems (CTXS) Stock Is Down Today

NEW YORK (TheStreet) -- Citrix Systems (CTXS) was falling -1.8% to $63.03 Monday after OTR Global downgraded the software company to "negative."

The firm said that checks of the company point to significant sales weakness.

Citirix has recently faced increased competition from VMWare's (VMW) PC and app virtualization products.

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Separately, TheStreet Ratings team rates CITRIX SYSTEMS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CITRIX SYSTEMS INC (CTXS) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CTXS's revenue growth has slightly outpaced the industry average of 8.0%. Since the same quarter one year prior, revenues rose by 11.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • CTXS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.92 is somewhat weak and could be cause for future problems.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Software industry. The net income has decreased by 6.3% when compared to the same quarter one year ago, dropping from $59.69 million to $55.94 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Software industry and the overall market, CITRIX SYSTEMS INC's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: CTXS Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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