Symantec Corporation: Why SYMC Stock Can Gain 20%

Symantec CorporationSymantec Corporation (NASDAQ:SYMC) stock recently announced the completion of its acquisition of Blue Coat Systems Inc (NASDAQ:BCSI), one of the leading providers of web security for enterprises and governments around the world.  The company closed the transaction earlier than expected.

The acquisition allows Symantec to realize its ambition to become the largest pure-play cybersecurity company in the industry.  SYMC stock started executing its integration strategy, and accelerating is commitments to define the future of cybersecurity. (Source:  “Symantec Completes Acquisition of Blue Coat to Define the Future of Cyber Security,” Symantec Corporation, August 1, 2016.)

Some market observers are optimistic that the Blue Coat acquisition would serve as a significant tailwind for SYMC stock to continue to trade higher. Shares of Symantec stock traded between $16.14 and $25.36 each over the past 52 weeks, gaining more than 61% in value. Symantec stock is currently trading at around $25.10 per share.

Symantec Stock Strengthens Competitiveness

Symantec CEO Greg Clark said that the combined company has a product portfolio that sets it apart as the most strategic player in the cybersecurity industry.  He noted that Symantec now has a portfolio of solutions that addresses 50 of the enterprise security budgets of around $40.0 billion of the total available market.

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Clark also stressed that chief information officers (CIOs) consider Symantec as one of the most strategic technology partners because of its scale and vision.  A survey conducted by Enterprise Strategy Group (ESG) showed that more than 75% of enterprises are more likely to purchase security solutions from Symantec following the combination of its portfolio with Blue Coat.

ESG principal analyst Jon Oltsik commented, “Based upon our quantitative research of cyber security and IT professionals; organizations are clearly excited about the prospects of getting access to the larger and more comprehensive cyber security portfolio from a combined Symantec-Blue Coat entity.”

The combined company is now considered a dominant player in the industry because of its capabilities to address the top priorities in cybersecurity: authentication, confidentiality, and integrity. Symantec’s secure sockets layer (SSL) certificates offer authentication while Blue Coat’s secure Web gateway (SWG) provides confidentiality and integrity.

The combined company is expected to generate $4.4 billion in revenues (62% would come from enterprise security) on a pro forma non-generally accepted accounting principles (GAAP) basis for the fiscal year 2016.

SYMC Stock: A Massive Growth Opportunity

Information technology (IT) analysts have observed that cybercrime is increasing dramatically. Cyber attacks are becoming more complex and sophisticated, and hackers are not just targeting businesses but also government agencies, educational institutions, non-government organizations, and individuals worldwide.

Companies and governments are increasing their budgets on cybersecurity to fortify their computer systems to prevent any intrusions. The firm Cybersecurity Ventures estimated that cybercrime would continue to increase, and that it would cost businesses globally more than $6.0 trillion every year by 2021. Global security spending is expected to be around $1.0 trillion from 2017 to 2021. (Source: “Cyber Numbers: Crime $6T Annually By 2021; Security Spending $1T 2017-2021; Unemployment Rate: 0%,” Information Security Buzz, September 23, 2016.)

The figures showed that Symantec stock has a tremendous opportunity to get a big share of the cybersecurity market, which would be great for Symantec stock. IT analysts observe that enterprises are increasingly adopting cloud services for security as they see the possibility of cost savings moving into the cloud.

Symantec’s Greg Clark boasted that the company, together with Blue Coat, has the broadest and deepest set of threat intelligence data in the industry, as well as the fastest threat propagation time. He added that the combined company will have the most powerful threat intelligence and open platform to deliver cyberdefense. The company’s combined security solutions offer the best protection for enterprises adopting the cloud.

Earlier this month, the company introduced “Symantec Endpoint Protection” (SEP), a new solution for small and mid-sized businesses (SMBs) to help protect their systems from targeted attacks and ransomware. The SEP cloud-based solution is easy to set up and deploy, and has all the features necessary for SMBs to secure the information of their customers.

The Bottom Line for SYMC Stock

Symantec stock reported solid financial results for its first-quarter fiscal 2017. SYMC stock’s adjusted earnings were $0.29 per share, above the $0.22 per share consensus estimate. The company’s revenue of $884.0 million also beat the $876.96 million that was expected by analysts. (Source: “Symantec Reports First Quarter Fiscal Year 2017 Results,” Symantec Corporation,  August 4, 2016.)

Management is confident that the company has the capabilities and resources to drive long-term growth and profitability. Clark said Symantec’s security solutions will be “disruptive to alternatives.”

Wall Street analysts covering Symantec have a consensus belief that the company will outperform the market. They forecasted that SYMC stock could trade as much as $30.00 per share, an increase of nearly 20% from its current trading price.