Symantec's LifeLock Purchase Could Reinvigorate Consumer Division

Oppenheimer believes Symantec Corporation SYMC’s $2.3 billion ($24 a share) acquisition of Lifelock Inc LOCK will boost its “slightly declining” consumer unit.

The deal would merge Symantec’s security and information management solutions with LifeLock’s Identity Theft Management products to create the “world's largest consumer digital security provider,” targeting a total available market of about $10 billion, which is growing in high single digits.

Further, the acquisition provides cross-selling opportunities for both companies given the market shift toward "freemium" offering. For context, Symantec has an installed base of about 65 million, while LifeLock's install-base totals 4.4 million.

“We view the acquisition of LOCK as a positive sign toward a renewed focus on stabilizing the slightly declining consumer segment (pre-LOCK) which is now expected to grow low-mid single digit YoY,” analyst Shaul Eyal wrote in a note.

Consumer Divisions

Symantec’s consumer segment revenues fell 5 percent and accounted for about 40 percent of Symantec’s second-quarter revenues and the LifeLock purchase would help maintain Symantec's market-leading position in Consumer Malware Protection.

For LifeLock, the consumer segment contributes about 95 percent of total revenues (FY 2016 guided to $667 million midpoint, +13.1 percent year-over-year).

Oppenheimer has an Outperform rating on Symantec. Shares of Symantec closed Friday’s trading at $23.75 and LifeLock closed at $20.75. In the pre-market hours, LifeLock shares surged 14.46 percent to $23.75.