How Citrix Could Spin Off $3.4 Billion GoTo Division

Regarding the upcoming announcement of the results of Citrix’s operational and strategic reviews and 2016 guidance, Credit Suisse analysts assured they expect: (1) the spinoff of the GoTo division and (2) additional operational changes, including the divestiture or shutdown of subscale businesses, aimed at further boosting margins.

The experts explained that the combination of these elements should drive substantial upside to the stock. Consequently, they decided to reiterate their Outperform rating and boost their target price by $5, to $100.

Related Link: Benzinga's Top Upgrades 11/02/2015

GoTo Has Got To Go

The report went into more detail regarding the spinoff of the GoTo division. Besides ShareFile, the analysts believe there’s little synergy between Citrix Online and the remainder of Citrix's businesses.

Based on Credit Suisse’s statistical analysis of valuation relative to growth across the software industry (on top of a comparable analysis to LogMeIn), the experts believe a tax-free spinoff of the GoTo division could trade at an enterprise value of $3.4 billion (or $20.79 per share), leaving the remaining Citrix parentco with an enterprise value of $9.6 billion, they concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

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