Wednesday’s Top Upgrades (and Downgrades): Adobe Systems Incorporated (ADBE), Symantec Corporation (SYMC), Caterpillar Inc. (CAT)

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.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Adobe Systems (NASDAQ:ADBE).

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