By Marcelo Prince
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--It's not often these days that Wall Street likes a
software stock. So investors took notice when two brokerages recommended buying
the battered shares of Citrix Systems Inc. (CTXS) on Thursday.
Like most software companies, shares of Citrix have tumbled since the
terrorist attacks on Sept. 11. Analysts are concerned that travel and business
disruptions will make it difficult for software vendors to complete sales this
month.
Citrix has fallen about 40% from its Sept. 10 close of $30.48. After rallying
as high as $19.97 earlier Thursday, shares recently were down 3 cents to
$18.35.
Both Merrill Lynch and Credit Suisse First Boston said in research notes that
the selloff is overdone, and attempted to distinguish the company from its
struggling peers.
Robert Stimson, analyst at Merrill Lynch, said his checks suggest "healthy
booking patterns both before and after the week of Sept. 11." He noted that
Citrix has about 7,000 resellers, an established customer base of 150,000 and a
solid balance sheet that should help it weather these difficult times better
than most software firms.
Stimson is confident the Fort Lauderdale, Fla., company will report
third-quarter earnings of 19 cents a share, but acknowledged its revenue could
fall 5% to 7% shy of his forecast of $149.8 million. Although he reduced his
estimates for 2002, Stimson upgraded his long-term rating to buy from
accumulate.
CSFB's John Rizzuto said Citrix's depressed shares represent a "compelling"
value, arguing it is approaching its "trough valuation" of $15.02. Also, Citrix
is different from other software vendors because it has $740 million in cash
and will generate $50 million in operating cash flow in each of the next two
quarters.
Like Stimson, Rizzuto believes Citrix was on track to meet its third-quarter
goals prior to the suicide attacks. That means it needed to sell about $15
million worth of software each week in September. While sales dropped sharply
the week of the attacks, Rizzuto thinks there was an acceleration in sales in
the week following the attack.
09-27-01
11:24 AM
