Analyst Note| Dan Romanoff, CPA |
According to multiple financial press outlets, including Bloomberg and Reuters, narrow-moat Citrix is reportedly exploring a potential sale of the company. Given that Elliott Management had previously stepped in and drove significant changes, we are not surprised to see possible sales talks occurring since Elliott announced it had accumulated a stake of more than 10% on Sept. 7. We believe an outright sale is a possibility. Additionally, Citrix held talks with a variety of suitors, including some large private equity firms, in 2017. Shares of Citrix were up 3% on the news that Elliott Management had taken a large position and are up approximately 5% to $115 after the potential sale speculation. Given the stock’s performance over the last six months and Elliott Management’s involvement, we believe an outright sale is a real possibility. Our fair value estimate remains $125 per share and believe there is some modest upside to the stock based on fundamentals, and perhaps more to the right buyer.