Shares of Citrix Systems Inc. slid toward a two-year low Friday, after Citigroup recommended that investors should not buy, following the “sudden” departure of the digital workspace company’s chief executive officer. Analyst Tyler Radke cut his rating to neutral, after being at overweight for at least the past three years. Radke also lowered his stock price target by 18%, to $115 from $140, citing “lower confidence” in the company’s ability to hit its medium- to long-term financial targets.
sank 5.3% in afternoon trading, putting it on track for the lowest close since October 2019. On Thursday, the stock dropped 1.7% after the company said David Henshall had stepped down as CEO, “effective immediately, after nearly 20 years with the company, to be succeeded on an interim basis by current Chairman Bob Calderoni. The company also said it expected to report third-quarter revenue at the “midpoint to the high end” of the previously provided guidance range of $765 million to $775 million — the FactSet consensus was $782 million — and said it will postpone its financial analyst meeting. The stock has slumped 12.2% since Sept. 15, when it closed at a seven-week high after Bloomberg reported that Citrix was once again exploring a potential sale of the company. “The timing of [Henshall’s] departure, just weeks ahead of the Q3 report/analyst day, suggests to us that the company is unlikely to be sold to a financial buyer, and long-term targets may be more unachievable with the analyst day pushed out,” Citigroup’s Radke wrote in a note to clients. The analyst day was previously scheduled for Nov. 4, the same day that third-quarter results are slated to be released. “While it’s encouraging to see an in-line performance after two misses in a row, we note this is on a much lower bar and it’s possible this could be driven by license and accounting-related items vs. underlying strength,” Radke wrote. The stock has tumbled 13.6% on July 29 to a then-two-year low the day after Citrix reported second-quarter results, in which the company beat earnings expectations but missed on revenue. After first-quarter results, in which the company missed both profit and revenue expectations, the stock slid 7.6%. Radkey said Interim CEO Calderoni, who is back in the role he had in 2015 to 2016, could be a “change maker,” but he believes “this will take time and carries a lot of risk,” especially in the face of increasing competition and secular risks. Citrix’s stock has dropped 24.1% year to date, while the SPDR S&P Software & Services exchange-traded fund
has gained 12.9% and the S&P 500 index
has advanced 17.1%.