Citrix Systems Could Report Upside Surprise Next Week

Citrix Systems Inc. (CTXS) has emerged as a top play in the booming virtual meeting sector, rivaling momentum favorite Zoom Video Communications Inc. (ZM). The company beat Q1 2020 top and bottom line estimates by wide margins in April, reporting $1.73 earnings-per-share (EPS) on $860.95 million in revenues. Revenues rose a healthy 19.7% year-over-year, reflecting a major surge in demand driven by the COVID-19 outbreak.

Citrix Systems Rapid Growth

The Nasdaq-100 component booked first quarter gains in nearly all product lines, underpinned by rapid adaption of virtual meeting spaces by corporations and small businesses all around the world. However, the stock lost ground after the company issued mixed Q2 guidance, expecting that reopenings and a return to normalcy after pandemic shutdowns would increase business travel. Of course that hasn’t happened, setting an optimistic tone ahead of the company’s July 23rd earnings report.

Zack’s Equity Research posted a bullish note on Citrix Systems earlier this week, asserting “this cloud computing company has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 25.44%, on average, in the last two quarters.” They also highlighted a bullish acceleration in upside surprises, noting that “for the most recent quarter, Citrix was expected to post earnings of $1.17 per share, but it reported $1.73 per share instead, representing a surprise of 47.86%.”

Wall Street And Technical Outlook

Wall Street consensus now rates the stock as a ‘Moderate Buy’, computed from 6 ’Buy’ , 7 ‘Hold’, and 1 ‘Sell’ rating. Opinions haven’t changed much between mid-June and mid-July, during which the majority of American states have reported infection spikes. In turn, this lack of coverage raises the potential for fresh upgrades. The stock is now trading just below the median $154 price target and $50 below the street high $200 target. Meanwhile, investors have been scooping up shares, lifting accumulation readings to all-time highs.

Citrix Systems is sold as a rock technically-speaking, breaking out above 18-year resistance in 2018 and posting a healthy string of new highs into May 2020. It’s now trading just 5 points below the rally peak at 155, in a perfect position to break out if it meets or exceeds Q2 earnings estimates next week. There’s plenty of upside potential if that happens, with technically-oriented targets matching Wall Street’s street high $200.