Citi On Symantec: 'Still Lots Of Moving Parts Following Q4'

Citi has maintained its Neutral rating on Symantec CorporationSYMC, saying there are "still lots of moving parts" after the company's lower-than-expected fourth-quarter results.

Symantec, which makes the popular Norton antivirus software, reported fourth-quarter EPS of $0.22 on revenue of $873 million versus consensus estimate of $0.23, and $878 million, respectively.

Mountain View, California-based Symantec saw a faster-than-expected shift within its product mix to subscription and ratable contract structures.

"Billings growth on a SYMC only basis was +3 percent (+~1.5 percent CC), slightly below where we modeled, but suggests business is still growing," analyst Walter Pritchard wrote in a note.

Related Link: Symantec Shares Tumble On Q4 Warning: How Is The Rest Of Security Faring?

However, the analyst said, "FY17 implications on guidance are still not totally transparent and company needs to break out billings/deferred revenue by CS/ES."

Pritchard noted that the company has a "challenging" task of cutting costs while maintaining billings growth to drive its FY18 operating margin target of 33 percent. In the conference call, the company said it plans to cut about 1,200 jobs as part of its $400 million cost savings plan.

The analyst also raised this year's EPS estimate by $0.02 to $1.09, but cut next year's EPS view by $0.02 to $1.39.

"With significant work in front of the company on multiple fronts (new CEO, cost cuts, new product roll outs and maintaining stable execution), it's hard to look out to FY18 'steady state' (two years billings growth + 33 percent OPM). In the meantime, cash flow, EPS and dividend support on stock is not compelling given risks," Pritchard added.

The analyst has a price target of $17.50 on the stock.