Lee Byers Downgrades Citrix Systems to Underweight from Neutral

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) July 29, 2011 -- Citrix Systems shares are trading lower this morning after Lee Byers analyst Martin Li Fong cut his rating on the software company’s shares to Underweight from Neutral. His new price target on the stock is $51, down from $75.

“We believe current valuations assume overly optimistic market adoption rates of desktop virtualisation technology, and specifically, of CTXS’ XenDesktop,” he writes in a research note. ” If our Base case market estimates prove accurate, we think the intrinsic value of CTXS shares is well below what is implied in the current share price.”

Li Fong writes that his “bottoms up market model implies a smaller addressable market than most think,” adding that “the sweet spot for desktop virtualisation in the near term is a relatively small subset of the worldwide PC installed base.”

The analyst adds that “by far the largest obstacle hindering broad desktop virtualisation adoption has been the relatively low (i.e., likely negative) return on investment. The large infrastructure requirements have made the technology viable mainly for large enterprises in highly regulated industries. We do not believe it will see wide adoption outside this market subset.”

Not least, he contends that the acquisition potential for the company has been over-estimated. “CTXS has long been considered a takeover candidate and though almost anything can happen in M&A, we believe this scenario is unlikely,” he writes. “CTXS’ desktop business is based on a symbiotic relationship with Microsoft. We believe the close relationship between the two will keep potential acquirers away.”

CTXS is down 52 cents, or 0.6%, to $81.63.

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