Wunderlich Remaining On Symantec's Sidelines Following Blue Coat Purchase

Wunderlich reiterated its Hold on Symantec Corporation SYMC after the company acquired Blue Coat Systems Inc BCSI for $4.65 billion. While stating that he remained on the sidelines, analyst Ryan MacDonald retained the price target of $19.

"While we believe that Blue Coat Systems is an acquisition that checks the boxes for SYMC — expands SYMC's leadership beyond the endpoint with little overlap, reaccelerates growth, margin accretive, and fills SYMC's open CEO position — we believe the price paid for the company is expensive at 6.2x trailing 12 months revenues. While Blue Coat is the market leader in web security, this is becoming an increasingly competitive market and Blue Coat has certainly had a checkered past as a public company, in our view," the analyst said in a note.

MacDonald expects to remain on the sidelines while Symantec works through the integration and until a clear strategic focus is established. From a tactical prospective, the brokerage believes Blue Coat's market leadership would help speed up Symantec's growth in enterprise security.

The analyst thinks Blue Coat expands Symantec's leadership beyond the endpoint, email, and servers, into web, cloud and CASB. Symantec's new platform offering would drive SYMC compete more directly against the next-gen security providers.

The brokerage believes the deal presented a significant cross-sell opportunity within the top 1000 accounts. Symantec also gets a new CEO with Blue Coat's Greg Clarke running the integrated company.