Market Overview

Jefferies Downgrades Symantec, Says Guidance Is 'Unachievable'

Jefferies Downgrades Symantec, Says Guidance Is 'Unachievable'
Related SYMC
Infographic: A Look At Data Breach Laws By State
10 Biggest Price Target Changes For Tuesday
Symantec launches free election security service (Seeking Alpha)

The honeymoon for cybersecurity name Symantec Corporation (NASDAQ: SYMC) is over, according to a Jefferies analyst. 

The Analyst

Jefferies analyst John DiFucci downgraded shares of Symantec from Hold to Underperform and lowered the price target from $30 to $23.

The Thesis

Symantec's guidance, which implies double-digit growth for the fiscal fourth quarter and mid-to-high single-digit growth thereafter, will likely be lowered, DiFucci said in a Thursday note. (See the analyst's track record here.) 

The company delivered total pro forma organic constant currency revenue growth of negative 3 percent to 1 percent in the last four quarters, according to Jefferies.

The website security divestiture will act as a 400-basis-point headwind to enterprise and a 70-basis-point headwind to overall margins, DiFucci said. 

"We believe pursuing both growth and profit simultaneously significantly elevates the execution risk embedded in this stock," he said. 

Jefferies expects the stock to re-rate lower when investors realize the current guidance is unachievable. This is despite Jefferies' stance that Symantec is well-positioned for secular themes such as vendor consolidation and cloud.

"While we believe SYMC offers greater strategic value than the base value alone, with the company delivering flattish growth over recent Qs, we think the premium the shares deserve is meaningfully below where they trade today," DiFucci said. 

The Price Action

Symantec shares are up 3.3 percent over the past year. The stock was down 0.29 percent at $27.44 at the time of publication. 

Related Links:

For Symantec, The Equifax Breach Bump May Be Overdone

FireEye Pops On Takeover Talk, Source Says No Deal Imminent

Photo courtesy of Symantec. 

Latest Ratings for SYMC

Aug 2018SusquehannaUpgradesNeutralPositive
Aug 2018Deutsche BankMaintainsHoldHold
Aug 2018BarclaysMaintainsEqual-WeightEqual-Weight

View More Analyst Ratings for SYMC
View the Latest Analyst Ratings

Posted-In: Cybersecurity Jefferies John DiFucci softwareAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (SYMC)

View Comments and Join the Discussion!

Credit Suisse Expects Fluor Corporation Will Be Boosted By Energy Sector Spending

Najarian Brothers See Unusual Options Activity In Snap, ON Semi, Apple, And Lowe's