Symantec (SYMC) Will be Hard to Love as Transition Continues; BTIG Remains Sidelined

BTIG affirms Symantec (NASDAQ: SYMC) with a Netural rating after the company posted Q4 results and cut its dividend late Thursday.

Analyst Joel Fishbien offered the following commentary: After Symantec downwardly revised 4Q16 guidance below the Street’s expectations at the end of April, the company reported revenue and EPS in line with their outlook. Management reaffirmed their expectations for a decline in FY17 revenues but pointed to growth on both the top and bottom lines in FY18, noting the shift in more subscription revenue will provide a tailwind for the Enterprise Security business. New cloud based solutions are planned to be released this year – one of which can integrate and manage third party security solutions on a single platform and another to secure public cloud workloads in AWS and Azure. We believe these solutions could present good steps forward in Symantec’s transition to the cloud, but we will wait until these products are released and contribute meaningfully to revenue to make a call. Management also detailed their $400 million cost efficiency program across various areas of the business to ultimately drive profitability and margin expansion.

As we have seen with other legacy security providers, Symantec continues to incur the near-term headwinds associated with transitioning their revenue stream from traditionally license-based products to subscription-based solutions. Management reiterated operating margin expansion in the coming years, which will put additional pressure on the company to improve their operating model. Overall, we believe the company remains firmly entrenched in a multi-front transition to drive long-term growth. The tough innings are still directly ahead, and we will wait to see results, the analyst noted.

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

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