Will Citrix Systems Thrive Under New CEO David Henshall?

Fort Lauderdale-based Citrix Systems (NASDAQ:CTXS) named David J. Henshall as its new president and chief executive officer (CEO) with immediate effect. He has also becomes a board member at Citrix.

Prior to his elevation to the top post, Henshall had served as Citrix’s chief financial officer and chief operating officer for over a decade. Henshall has succeeded Kirill Tatarinov as the CEO. In fact, Tatarinov’s decision to step down was based on a mutual agreement.

Notably, Mark M. Coyle was appointed as chief financial officer (on an interim basis) in place of Henshall as part of the other managerial changes. Also, an Operations and Capital committee has been formed with an aim to drive long-term growth and profitability.

The committee will have Citrix’s Executive Chairman, Robert Calderoni at its helm. Other members are Henshall and directors of the company- Jesse Cohn and Peter J. Sacripanti.

Lack of Stability at the Top

The appointment of Henshall implies that Citrix has had four CEOs in less than two years. The frequent changes at the helm did not find favor with investors. Consequently, the stock declined in after-market trading on Jul 10.

Notably, Citrix’s shares have underperformed the Zacks categorized Computer-Software industry in the last one year. While the stock was up 20%, the industry’s gained 28.7% in the same period.

We remind investors that Tatarinov had been appointed as the company’s CEO replacing Calderoni in Jan 2016. Calderoni had served as Citrix’s CEO since Oct 2015, following the retirement of Mark Templeton.

We note that Tatarinov had previously served in companies like Microsoft (NASDAQ:MSFT) .

Apart from the frequent changes at the top, Citrix has faced challenges from other quarters as well. Citrix spun off its GoTo family of products following pressure from activist investment firm Elliott Management. Additionally, Citrix is struggling on the top-line front which is evident from its 19.74% year-over-year decline in revenues in the first quarter of 2017.

Given this gloomy background, now it remains to be seen whether the appointment of Henshall yields the desired results as the company expects to increase its profitability and find favor with shareholders.

Q2 Guidance Maintained

The company said that it will release its second quarter results on Aug 2. Citrix still expects net revenue in the band of $685 million to $695 million for the second quarter. Also, earnings per share (on an adjusted basis) are anticipated to be in the range of 97 cents to $1.00.

The Zacks Consensus Estimate for second-quarter revenues and earnings per share is $690.42 million and 85 cents, respectively.

Zacks Rank & Key Picks

Citrix currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader computer and technology sector include Nokia (HE:NOKIA) Corporation (NYSE:NOK) and Asure Software (NASDAQ:ASUR) , with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Nokia and Asure Software foresee healthy earnings per share growth rate of 18.9% and 25%, respectively, for the next three to five years.

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