BofA Dove Deep Into Veritas, Symantec

In a report published Wednesday, BofA Merrill Lynch analysts maintained an Underperform rating on

, with a price objective of $20, ahead of the Analyst Day. The Analyst Day is scheduled for April 17, during which the management is expected to provide more information on the split with Veritas Technologies. In the report BofA Merrill Lynch noted, "We appreciate that the split will result in much more focused businesses, but are cautious in the near-term as we see two challenges: (1) multiple cash flow headwinds and (2) the individual businesses will most likely embark on aggressive M&A to accelerate innovation in a largely stale product set, possibly diluting margins." The analysts believe that, after the split, Symantec could generate 0-2 percent revenue growth and 35-40 percent operating margins. This is from a long-term operating model standpoint and assumes that the consumer business can be stabilized. Veritas' growth prospects appear better. NetBackup, which contribute 45% of the revenues, may grow at 15%+. From a long-term operating model standpoint, Veritas could generate 5 percent revenue growth and high 20 percent operating margin, after the split. Symantec faces structural challenges almost across the board-storage management. Although the split will not alleviate these challenges, "the separate entities would have more freedom to try to address them," then analysts add.