UPDATE: MKM Partners Downgrades Symantec (SYMC) to Sell

March 21, 2014 6:45 AM EDT Send to a Friend
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Price: $23.51 -0.72%

Rating Summary:
    9 Buy, 25 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 29 | Down: 28 | New: 24
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(Updated - March 21, 2014 11:05 AM EDT)

MKM Partners downgraded Symantec (NASDAQ: SYMC) from Buy to Sell with a price target of $17.00 (from $26.00). The change follows the termination of CEO Steve Bennett.

Analyst Israel Hernandez said, "Mr. Bennett joined the company two years ago. After a successful first year that resulted in improved financial performance and a recovery in the stock, Mr. Bennett miscalculated the impact of a major sales reorganization, precipitating the reset in October 2013. Our downgrade reflects the view that Symantec will face another multi-year period of upheaval, management turnover and strategic uncertainty as it tries to reposition and transform a largely legacy business of security and infrastructure software and services for growth. We believe finding a willing and capable CEO is likely to prove challenging. We also believe turnover among the senior ranks, mostly Bennett appointees, is likely to also increase in the near-term."

"Without new products, we believe Symantec will be hard-pressed to achieve its 5% growth target by FY17. It could try to acquire technology assets that can be leveraged through its distribution channels, but given current private company valuations and cash flow commitments (buybacks/dividends), Symantec may be priced out of the market. While a suspension of the dividend ($420mn/year) is unlikely, we do not rule this out if the board decides it must buy its way to growth," he added.

For an analyst ratings summary and ratings history on Symantec click here. For more ratings news on Symantec click here.

Shares of Symantec closed at $20.91 yesterday.


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