How Citrix Could Be Worth 50% More

Technology

Published: June 11, 2015 1:35 pm

Last Updated: June 11, 2015 1:38 pm

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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