The tech industry is always in a flux. There is always a new innovation or an introduction in the industry that redefines the current mood of the industry. But, looking closely the tech industry has been volatile in the past which impacted many hardware and software companies. One such sufferer of this is Citrix Systems (CTXS, Financial) which had a soft finish to the fiscal 2014. The company despite talking about its scars is now focused for an upbeat performance in 2015. Working from a more focused organizational footprint, Citrix is now undertaking many initiatives to be a market leader in this booming tech sector. Let us have a look at the overall tech industry as well as Citrix’s strategies to be profitable in the upcoming fiscal year.
Tech industry had been struggling for some time in the past which also affected many hardware and software companies, but the recent development in some of the cream and really new segments within the industry is redefining the tech landscape once again. For 2015, Citrix is now focusing on various aspects to improve profitability. It is mainly looking at bringing attractive innovations in its offerings, delivering better experience, more flexibility and greater security to its customers.
In addition, Citrix also has to change the way it carries out the operations. Under this, Citrix is restructuring its organizational model to achieve operational excellence. Now, the company is also focusing on investing in some of the highest growth opportunities to achieve positive financial growth and overall margin growth.
Attractive product pipeline
As the tech industry is growing with many opportunities, the competition is growing and to stand out in this, Citrix is now focusing on expanding its market opportunity by introducing new competitive products from its pipeline. It is planning to release some amazing features for XenApp which will surely strengthen its position among its customer, partners and service providers. Not only is software but also in engineering, manufacturing and government sector Citrix is adding support for LINUX-based DDI and remote apps. In addition, for contextual security in banking and healthcare sectors Citrix is releasing HDX screen recording which seems to be a key introduction by it which will add to its growth momentum.
To further engage customers and accelerate pipeline closure rates, Citrix is bringing in an attractive mix of workspace suite deals. Under this, the company is excited about the introduction of XenMobile 10 which is a completely integrated back end, providing a single console for device security, mobile app security and app delivery operations.
Tech industry's prospects
The tech industry has bright prospects. This revolution in the industry is sure to benefit every corner of its realm from software to Cloud. The companies are, however, speculative about this growth as they want to squeeze out better financial performance. Cloud and data center consolidation are two mushrooming sectors that have also lead to an undeniable shift of the customers towards leading the tech industry to recover. In the software, XaaS will be a booming offering giving many bright growth opportunities to software companies including Citrix. Also, Merger and Acquisitions will also play an important role in defining the competition among the peers.
Competitors
In Citrix’s growth story, Cisco can play a negative role and can offer a stiff competition. Cisco is definitely in a better financial position that Citrix with EBITDA of 13.98 billion. Even, Cisco is offering better earnings per share (1.67) than Citrix (1.47). But, comparing the near-term growth prospects on the basis of price to earnings ratio, Citrix is definitely a good stock with P/E of 40.66 as compared Cisco with P/E of just 17.12.
Now moving to the fundamentals, the stock does look slightly over valued with a trailing P/E of 40.66 but it can be considered as its forward P/E of 14.76 is showing good earnings growth in the near term. Further, with a profit margin of 8.01% it is expected to attract more investors leading to a growth in the market share of the company. So, considering Citrix’s strategic moves and statistics, it can be said that the stock is definitely a good pick at these valuation levels.
