PreMarket Prep Stock Of The Day: Citrix Gets Some Elliott Management Love

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

With most of the second-quarter earnings reports behind us and not much happening on the macro front, certain news items may get more media attention than they would otherwise attract. The announcement of Elliott Management's recent stake in Citrix Systems Inc. CTSX and the corresponding price action makes it the PreMarket Prep Stock Of The Day.

Not Having A Good Year: What prompted Elliott's activist movement in the issue has been its dismal relative performance in 2021. That comes on top of the issue being well off its all-time high made in July 2020 at $173.56.

After ending 2020 at $130.10, the issue showed promise in the early part of the year, rallying to $145.19 in January. That level was revisited in April when it peaked at $144.47 but weakened to end the month at $123.85.

The issue found support at the $113 area in both May and June, ending the latter $6 lower from its April close at $117.26. The bottom fell out in July following its second-quarter revenue miss, along with margin contraction and weak guidance.

Post-Earnings Day Low: As is so common in this over-reactionary market, an issue may reach an extreme level on the day following an earnings report (both on high and low-end) and reverse course. That was the case for Citrix when it swooned from $114.55 to $99 (or 13.5%) on July 29. In fact, the panic-selling off that open allowed the issue to bottom early in the session only pennies off its opening print at $94.61.

The closest it came to that depressed level was the following day when it found buyers ahead of that low at $96.71 and closed green for the session in triple digits at $100.75.

Continuation Move, Then Consolidation: Two days following the price action instigated by the report, the issue peaked on Aug. 2 at $103.94. Since that day, it has traded in a narrow range with the lower boundary being $99.41.

On the upside, the issue was able to extend the upper end of the range slightly when it peaked at $104.50 on Friday. In muted action on Tuesday, the issue ended the session just shy of the closing high for the rebound ($103.57) at $103.50.

Here Comes Elliott Management: Before the conclusion of after-hours trading on Tuesday, activist hedge fund Elliott Management disclosed close to a $1.3 billion stake in the company and sought to boost the software company's lagging stock price.

As expected, the issue immediately caught a strong bid in the after-hours session, ending the night at $109.49, nearly $6 higher than its closing price of $103.50.

PreMarket Prep Take: When the issue was being covered on the show it was trading at the $110 area. Both hosts didn't think the issue would fill the gap (void in price) instigated by the price action following its earnings report. In order to fill that void in price, the issue would need to reach $114.14.

Neither hosts of the show had a potential area where they would be interested in attempting a long in the issue.

The full discussion on the issue from Wednesday’s show can be found here:

Price Action: After higher open, the issue continued in that came up shy of the aforementioned resistance level and sharply reversed course. The pace of the decline accelerated once the issue breached its opening price of $111.26.

The stock found intraday support at $106.38 and rebounded to close at $106.59, up 3%.