Why Citrix Systems, Inc. (CTXS) Should Be a Solid Value

Thirdly, Netscaler saw strong growth in the quarter. Interestingly, this is in contrast with F5 Networks’s recent results. It’s hard not to conclude that the relationship with Cisco Systems, Inc. (NASDAQ:CSCO) hasn’t helped. After Cisco decided to stop investing in its application delivery controller (ACE), it shifted to recommending that its installed base should purchase Citrix’s Netscaler.

While the market was also made open to F5, it appears that Citrix Systems, Inc. (NASDAQ:CTXS) has taken the opportunity to broaden the number of verticals it sells into. If there was some good news for F5 investors, it is that Citrix is not seeing any competitive changes in the sectors where it competes with F5. As for Cisco, these results are a good sign that its intelligent networks have real relevance with its customers.

Where next for Citrix?

In conclusion, if Citrix Systems, Inc. (NASDAQ:CTXS) hits its full year guidance then the stock will be higher from here, although, I doubt many will believe that right now. In my view, there were enough positives in this report to justify topping up. Netscaler sales were excellent and XenMobile was cited as being on track for the full year. The weakness in desktop & mobile virtualization license sales is understandable in the context of a weak tech spending environment for Q1, and the launch of XenMobile seems to have caused some delays.

As ever, investors need to focus on valuation. This stock generated nearly $700 million in free cash flow and despite the weaker Q1, it is guiding towards over 14% revenue growth in 2013. If the tech slowdown proves to be temporary and customers get acquainted with the XenMobile offering, then the stock could recover nicely from here. I bought some more in anticipation.

The article Why This Tech Stock Looks Like a Good Value originally appeared on Fool.com.

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