Citrix Systems (CTXS) Q1 Earnings: Can the Stock Surprise?

Citrix Systems, Inc (CTXS – a leading global provider of virtualization, networking and cloud computing solutions – is slated to report first-quarter 2016 results on Apr 20, after the closing bell.

Last quarter, Citrix Systems recorded a positive earnings surprise of 46.00%. The software company, in fact, has a healthy track record with respect to earnings, having delivered positive surprises in each of the last four quarters with an average beat of 30.66%.

Despite the impressive background, an earnings beat is not guaranteed this time around, as suggested by the Zacks model.

Here is what our model indicates:

The possibility of Citrix Systems beating the Zacks Consensus Estimate in the first quarter is rather low. This is because it lacks the right combination of the two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) – that reflects the possibility of a positive earnings surprise.

Zacks ESP: Earnings ESP for Citrix Systems is 0.00%. This is because the Most Accurate estimate is in line with the Zacks Consensus Estimate of $0.74.

Zacks Rank: Although Citrix Systems carries a Zacks Rank #3, the 0.00% ESP makes surprise prediction difficult.

Factors at Play

We expect the company’s first-quarter results to benefit from its strong product portfolio. We are impressed by the company’s efforts to constantly launch new products. Last month, the company announced the simplification of the Secure Delivery of Browser-Based Apps. 

We are also impressed by the company’s focus to reward shareholders through buybacks. In the fourth quarter, Citrix Systems bought back 4.3 million shares. We expect an update in this regard as well on the first-quarter earnings call.

However, we expect the company’s first-quarter results to be hampered by adverse foreign currency movements as the company serves markets across the globe. Citrix Systems expects net revenues in the band of $785 million to $790 million for the first quarter of 2016. Earnings per share (on an adjusted basis) are projected in the range of $0.91 to $0.93.

Stocks to Consider

Here are some companies for investors to consider in the computer and technology sector that are likely to report higher-than-expected earnings in their upcoming release.

With an earnings ESP of +1.45% and a Zacks Rank #3, AT&T, Inc. T is scheduled to report on Apr 26.

Sprint Corporation S, which has an earnings ESP of +38.46% and a Zacks Rank #3, is expected to report on May 3.

With an earnings ESP of +8.89% and a Zacks Rank # 3, Level 3 Communications, Inc. LVLT is slated to release results on Apr 28.

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