Citi Initates Pair Trade On VMware And Citrix Systems

Citi analysts Walter H. Pritchard and Kenneth Wong initiated a pair trade Monday on VMware, Inc. VMW and Citrix Systems, Inc. CTXS.

Pritchard and Wong expected “VMW will put up strong Q4 into modest expectations and while FY15 guidance will likely come down from “mid-teens”, we expect mid-point will be comfortably above 10 percent.

“Meanwhile, at CTXS, we see same risk to top-line guidance and while management has committed to 100bp of margin expansion, we increasingly hear of investments in new initiatives internally that tell us there isn’t as much focus on the core business as investors would like.”

The analysts added that they “hear mixed data points [for CTXS] around typically seasonally strong Q4 and an uptick in mid-level executive turnover which tells us there remains execution issues that are not being addressed that could come to light in upcoming earnings report (late Jan)."

The firm maintained a Buy rating and $104 price target on VMware. Citrix Systems was rated Hold with a $60 price target.

Citrix Systems recently traded at $61.29, up 0.29 percent.

VMware recently traded at $80.82, up 2.43 percent.