Morgan Stanley Overweight On Symantec Again, As Company Enters 'Period Of Favorable Model Dynamics'

Following the Blue Coat acquisition, Morgan Stanley’s Keith Weiss believes Symantec Corporation SYMC is “better positioned than ever to address the long-term secular themes within security.”

Weiss reinitiated coverage of the company with an Overweight rating and price target of $27.

Better Positioned

Post-acquisition, the company is better positioned to address secular themes in security, such as “increased consolidation of security functionality onto broader platforms, increased visibility across threat vectors and more automation across the security architecture.”

Related Link: Goldman Sachs Reinstates Symantec At Buy, Sees "A Compelling Case Study In Cost Optimization"

In addition, new growth drivers for the enterprise security business, along with meaningful cost synergies, are likely to drive EPS significantly higher, following the Blue Coat acquisition.

“While mergers hold risk, if the new mgmt team well executes to this potential, a stronger growth profile should push multiples higher,” according to the Morgan Stanley report.

Underappreciated Business

Weiss believes the addition of Blue Coat meaningfully strengthens the enterprise security business by expanding the TAM, raising the growth profile of the top line to the low teens and improving profitability.

In fact, the analyst believes that the improved positioning of the enterprise security business continues to be underappreciated by investors.

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