Citrix Systems, Inc.

CTXS Details

Citrix Systems, Inc. (NASDAQ: CTXS) is a business that provides digital workplace solutions. Its App Delivery and Security solutions, which may be consumed as hardware or software, enhance its Workspace solutions by delivering the application and data employees require over any network with security, dependability, and speed. CTXS markets and licenses its products globally through various channels, including resellers and direct sales through the Web. CTXS produces income by selling application virtualization solutions, unified endpoint management solutions, App Delivery and Security revenues, including Citrix ADC and Citrix SD-WAN, and professional services. As of October 15, 2021, the company's market capitalization stood at USD 11.89 billion.

Enhancing relationship with Google Cloud: CTXS and Google Cloud will deepen their strategic relationship on October 12, 2021, to offer the future of hybrid work for corporate clients. In addition, CTXS and Google Cloud announced new cooperation, with CTXS releasing a new Desktop-as-a-Service (DaaS) offering on Google Cloud. CTXS's management plane and market-leading HDX protocol will be used to allow the smooth delivery of virtualized apps and desktops on Google Cloud.

Transition in Leadership: CTXS announced on October 6, 2021, that Bob Calderoni, Chair of the Citrix Board of Directors, has been appointed temporary Chief Executive Officer and President, starting immediately. Mr. Calderoni takes over for David J. Henshall, who has stepped down as President and CEO and a member of the company's Board of Directors.

H1FY21 Results: The company reported a slight decrease of 4.34% in total net revenues to USD 1.59 billion during H1FY21 (ended June 30, 2021) compared to USD 1.66 billion during H1FY20, primarily due to decline in sales of its perpetual workspace solutions and its maintenance services. As a result, it has witnessed a decrease in net income to USD 152.81 million in H1FY21 from USD 294.13 million in H1FY20. As of June 30, 2021, the company had cash and cash equivalents (including short term investments) of USD 521.01 million with a total debt of USD 3.47 billion.

Key Risks: CTXS relies on a small number of third-party suppliers and contract manufacturers to provide hardware or hardware components for its App Delivery and Security solutions. As a result, the failure of these suppliers to offer these critical items might significantly impact the company's operations and financial condition.

Outlook: CTXS anticipates that its operating expenditures for Q3FY21 will rise primarily due to the Wrike acquisition, and to a lesser extent, due to the organizational changes it is doing to expedite its cloud transition.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CTXS Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CTXS' share price has fallen 30.55% in the past six months and is currently leaning towards the lower-band of the 52-week range of USD 90.56 to USD 145.19. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 39.17. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 120.52. Considering the dip in the stock price, strong track record, steady dividend yield, healthy profitability margin, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 97.58, up 1.95% as of October 15, 2021.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level. 

GoDaddy Inc.

GDDY Details

GoDaddy Inc. (NYSE: GDDY) offers cloud-based solutions and personalized customer support to small businesses, web design professionals, and individuals. It provides website creation, hosting, and security tools to protect the customers' online presence and services such as connecting to customers and managing the business.

Adding Value for the Customers: On September 28, 2021, GDDY launched two new point of sale (POS) devices, including a countertop Smart Terminal and a mobile Card Reader, as an expansion of its GoDaddy payment, allowing small businesses to sell, track, and manage sales in more locations than any other comparable platform. As a result, GDDY can now completely serve 60% of its more than 20 million customers who sell online and offline, allowing them to sell anything, anywhere. In addition, GDDY has competitively priced its new offering, thus enabling cost-saving.

On August 24, 2021, GDDY launched GoDaddy Invoicing and Payments, the newest feature on GoDaddy Pro's hub that provides web designers and developers with more accessible and faster-invoicing processing options via a simple integrated user interface.

Q2FY21 Results: The company reported YoY growth of 15.49% in total revenue to USD 931.3 million in Q2FY21 (ended June 30, 2021) from USD 806.4 million in Q2FY20. The Domains segment, which represented 46.89% of the total revenue in Q2FY21, reported YoY growth of 18.15%. As a result, GDDY reported a net income of USD 46.8 million in Q2FY21 vs. a net loss of USD 673.2 million in Q2FY20. As of June 30, 2021, the company had cash & cash equivalents of USD 1.38 billion and total debt of USD 3.89 billion.

Financial and Operational Metrics (Source: Earnings Presentation, August 04, 2021)

Key Risks: GDDY operates in the highly competitive IT Services industry and faces direct competition from significant players like Google, Amazon, and Microsoft, which could cause pricing pressure. Should this trend continue, it could harm its financials state of affairs. In addition, GDDY is dependent on third parties to undertake various technical, processing, servicing, and support functions. Hence, any failure of contractual obligation by these third parties could impair its results.

Outlook: In Q3FY21, GDDY expects to clock total revenue of ~USD 945 million, thus realizing YoY growth of 12%. For FY21, it expects to generate ~USD 3.75 billion revenue, representing a 13% YoY increase along with 16% YoY growth in unlevered free cash flow to ~USD 955 million.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

GDDY Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: GDDY's stock price decreased 19.64% in the past six months and is currently trading in the lower band of its 52-week range of USD 68.14 to USD 93.75. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 42.42. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 85.40. Considering the correction in the stock price, decent balance sheet, recently added new features, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 69.60, down 0.89% as of October 15, 2021, 2:40 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached. 

Alteryx, Inc.

AYX Details

Alteryx, Inc. (NYSE: AYX) is self-service data analytics software providing company. The Alteryx Analytic Process Automation (APA) software platform integrates analytics, data science, and business process automation into a single self-service platform to assist businesses in accelerating digital transformation, improving corporate goals, and increasing worker efficiency. As of June 30, 2021, AYX had over 7,400 customers in over 90 countries, including 770 Global 2000 companies. It generates revenue by selling a subscription-based software platform and offering professional services such as training and consulting.

Acquisition of Hyper Anna: On October 07, 2021, AYX announced the acquisition of Hyper Anna, a Sydney, Australia-based startup that provides Artificial Intelligence (AI) driven insights. With the purchase of Hyper Anna, AYX clients can automate the whole analytic process from data sources to AI-driven insights. However, no financial details concerning the deal have been released.

Enhancing Partnerships to Add Value: On September 28, 2021, AYX and UiPath, a prominent enterprise automation software provider, announced the extension of their strategic relationship and additional integrations via a connector as part of AYX's current product release. As a result, customers of AYX and UiPath may now automate end-to-end analytical processes that leverage valuable data from legacy enterprise systems and non-API sources.

H1FY21 Results: Due to higher post-contract support (PCS) and service revenues, the firm recorded a 16.47% increase in total revenue to USD 238.83 million for H1FY21 (ended June 30, 2021) compared to USD 205.06 million during H1FY20. However, it recorded a rise in net losses to USD 84.10 million during H1FY21 compared to USD 50.77 million during H1FY20, owing to an increase in operating expenditures. As of June 30, 2021, it had USD 661.88 million in cash and cash equivalents (including short-term investments) and total debt of USD 746.43 million.

Growth in ARR (Source: Investor Presentation, Q2FY21)

Key Risks: Each share of AYX's Class B common stock has ten votes, compared to one vote for each share of Class A common stock. Consequently, as of June 30, 2021, Class B common stockholders, including its chief officers, directors, and holders of more than 5% of its common stock and their affiliates, had a huge majority of the voting power. This concentration of voting power limits other shareholders' capacity to influence company affairs.

Outlook: AYX forecasts revenue for Q3FY21 to range between USD 121.0 and 124.0 million, with annual recurring revenue (ARR) ranging between USD 572.0 and 575.0 million as of August 03, 2021. The non-GAAP loss from operations is projected to range from USD (17.0) – (14.0) million.

It expects sales of USD 520.0 – 530.0 million in FY21, with an ARR of about USD 635.0 million as of December 31, 2021. The non-GAAP loss from operations is projected to be in the USD (15.0) – (5.0) million range.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

AYX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: AYX's share price has declined 45.54% in the past twelve months and is currently leaning towards the lower-band of the 52-week range of USD 66.66 to USD 145.41. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 56.87. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 90.22. Considering the company's track record, partnership extension agreements, a recent acquisition, and current valuation, we recommend a "Buy" rating on the stock at the current price of USD 75.80, down 1.30% as of October 15, 2021, 2:31 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.