Does It Make Sense to Invest in Symantec?



Symantec will benefit from more emphasis on cybersecurity

According to the Cybersecurity Market Report, the cybersecurity market on a global scale is expected to grow at a CAGR (compound annual growth rate) of 9.80% from $77 billion currently to $170 billion by 2020. Symantec (SYMC) is the leader in security software. It will likely benefit from this trend. Barracuda Networks (CUDA) supplies email and web security appliances. Palo Alto Networks (PANW) specializes in firewalls. They’re some other prominent players in the cybersecurity space.

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After selling Veritas, it’s expected that Symantec will reorganize its business to invest funds in the rapidly growing segments in the cybersecurity space. It has already made inroads into DLP (data loss prevention), ATP (advanced threat protection), and security analytics in the cybersecurity space. They’re poised for growth in the future. As a result, it will likely get back on track to operate as a pure play security software player.

Symantec’s Veritas sale entices investors with share buybacks and dividends

In the last part of this series, we discussed that the sale of Veritas, along with its significant cash position of ~$5.68 per share, has let Symantec increase its share buyback from $1.5 billion to $2.6 billion. With a market capitalization of ~$14.5–15 billion, this amounts to ~17.50% of its market capitalization. Also, Symantec announced that it will continue to pay a dividend of $0.15 per share. It appears that with these actions, Symantec aims to lure its investors until it can report improved financial results.

Fiscal 2Q16 expectations

For fiscal 2Q16, Symantec expects its revenue and EPS (earnings per share) to be $1.48–1.53 billion and $1.80–$1.90, respectively.

You can consider investing in the Technology Select Sector SPDR Fund (XLK) and the PowerShares QQQ Trust ETF (QQQ) to gain exposure to Symantec. XLK and QQQ invest about 0.41% and 0.32% of their holdings in Symantec, respectively.


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