Market Overview

Analyst Calls Abandoned Symantec-Broadcom Merger Talks A 'Head-Scratcher'

Analyst Calls Abandoned Symantec-Broadcom Merger Talks A 'Head-Scratcher'

Symantec Corporation (NASDAQ: SYMC) shares took a beating on Monday after CNBC reported Symantec and Broadcom Inc (NASDAQ: AVGO) have abandoned merger talks. One analyst said the news is a major surprise, and investors should remain on the sidelines when it comes to Symantec's stock.

The Analyst

Wedbush analyst Daniel Ives reiterated his Neutral rating and $19 price target for Symantec.

The Thesis

Ives was anticipating a deal announcement sometime this week and said Symantec may have simply demanded too high of a price.

“With no other strategic or financial bidders that we see throughout the landscape we view this decision by Symantec and its Board as a major head scratcher given the myriad of challenges the company has on the horizon,” Ives wrote in a note.

Ives previously estimated Broadcom could enjoy at least $1.3 billion in deal synergies from a Symantec buyout.

Ives said a reasonable price range for a Symantec buyout would be in the $26 to $28 per-share range. Now that a buyout deal is no longer imminent, Ives said Symantec must prove its standalone valuation to Wall Street, which may be difficult given its recent CEO departure, disappointing earnings and difficult environment.

Ives said an acquisition made a lot of sense for Symantec given the company’s struggles since its disastrous acquisition of Veritas back in 2005. A deal between Symantec and Broadcom may ultimately happen down the road, but a price of between $28 and $30 per share may be overly optimistic, Ives said.

Price Action

Symantec shares traded lower by 14% to $21.99 at time of publication.

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Latest Ratings for SYMC

Jun 2019UpgradesNeutralBuy
Jun 2019DowngradesEqual-WeightUnderweight
May 2019Initiates Coverage OnMarket Perform

View More Analyst Ratings for SYMC
View the Latest Analyst Ratings

Posted-In: Daniel Ives WedbushAnalyst Color M&A Reiteration Analyst Ratings Best of Benzinga


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