How Citrix Could Be Worth 50% More

By Chris Lange Published Jun 11, 1:35PM EDT

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Citrix Systems Inc. (NASDAQ: CTXS) is under pressure from activist investors. Elliot Management is petitioning the Citrix board of directors to make some changes within the company. The endgame in all this is to have a strong return for shareholders in the near future.

Elliot Management, in typical activist fashion, sent a letter to the board of directors at Citrix. Ultimately the firm believes that Citrix can achieve a stock price of $90 to $100 or more per share by the end of 2016.

Note that the firm controls a stake of roughly 7% of Citrix, making it one of the largest shareholders. It controls 5.88 million shares of common stock and a series of options.

Elliot explained further:

This outcome — which represents an increase in stockholder value of approximately 50% — is achievable because Citrix has leading technology franchises in attractive markets but has struggled operationally for years. As a result, today Citrix’s operations and product portfolio represent an opportunity for improvement of uniquely significant magnitude.

The activist firm gave the purpose of the letter in a few parts:

To use as an introduction
Preview some of the extensive work Elliot has done to validate the $90 to $100+ per share opportunity
To request a meeting with the board of directors to share the firm’s thoughts about how to improve Citrix for the benefit of stockholders, employees and customers

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The firm also said:

To be clear, we approach this opportunity with tremendous respect for the work Mark and the entire Citrix team have done to achieve technological leadership, particularly in the high-quality markets in which Citrix participates. Without their vision, the enormous opportunity outlined below would not exist today.

The range of $90 to $100 is up 36% to 51% from the $65.97 close. After a gain of almost 7% on Thursday, that still leaves way above average expected gains versus the market if Elliott’s plan manages to work out.

Shares of Citrix were up 7% at $70.68 Thursday afternoon. The stock has a consensus analyst price target of $68.23 and a 52-week trading range of $56.47 to $72.89.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.