Symantec Corporation (NASDAQ:SYMC) looks buggy
Similar valuation worries plague antivirus software maker Symantec, the subject of a downgrade to “perform” from Oppenheimer this morning. As Oppenheimer points out, its change of opinion is largely motivated by the fact that “SYMC [is] approaching our prior PT of $25,” so “upside becomes relatively limited as catalysts (new CEO + strategy, dividend) have played their course for now.” Calling Symantec “a show-me story with a heightened focus on execution,” Oppenheimer is stepping to the sidelines to see how things play out.
Problem is, I’ve already seen what Symantec Corporation (NASDAQ:SYMC) has to show, and — spoiler alert — it doesn’t look good.
Dividend-less like Adobe Systems Incorporated (NASDAQ:ADBE), Symantec is similarly strong on the cash-flow front. But just like Adobe, it’s simply not generating enough cash to justify the valuation. Priced at 15.5 times earnings, and 12.6 times its $1.3 billion in free cash flow, Symantec Corporation (NASDAQ:SYMC) doesn’t look all that expensive. But most analysts agree there’s limited room for growth at this company — high single digits at best. As a result, any double-digit multiple at all is probably too high a price to pay.
Long story short, I wouldn’t go long this stock at today’s prices.
The article Wednesday’s Top Upgrades (and Downgrades) originally appeared on Fool.com and is written by Rich Smith.
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