Morgan Stanley Downgrades Symantec, Says It's Losing Share In Core Markets

Symantec Corporation SYMC fell Tuesday after Morgan Stanley downgraded the stock, citing increased competition and management turnover as risks to the software security company’s turnaround and earnings.

The Analyst

Keith Weiss downgraded Symantec from Equal-weight to Underweight and lowered the price target from $23 to $14. 

The Thesis

Morgan Stanley’s recent survey of chief security officers showed Semantic losing share in endpoint and web security — its two core markets, Weiss said in the Tuesday downgrade note. (See his track record here.)  

That suggests risk to Symantec's revenue guidance, the analyst said. 

Symantec has been slow to pivot to growing trends in security, including cloud security, analytics and other strategic areas, he said. Coupled with a faster pace of innovation from competitors, that could be problematic for the stock, Weiss said. 

“We think this dynamic continues — our recent CSO survey shows Symantec's share in endpoint security moving from 17 percent today to 15 percent in the next three years, while (Symantec unit) Blue Coat's share in web security moves from 10 percent today to 7 percent in the next three years." 

Morgan Stanley forecast a slower rebound that Symantec has projected, with an expectation of 2020 billings falling 6 percent year-over-year. 

The company posted mixed quarterly results last month and announced the departure of CEO Greg Clark.

Price Action

Symantec shares were down 1.87 percent at $18.85 at the close Tuesday. 

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