NortonLifeLock Locks in Another Solid Quarter; Maintain FVE; Shares Overvalued

We are maintaining our $21 fair value estimate for no-moat NortonLifeLock after clocking in a solid quarter, with top-line growth matching our expectations. Management also provided a brief update on NotonLifeLock’s merger with fellow consumer cybersecurity firm Avast, a deal the firm expects to close in the middle of 2022. We believe this deal will allow NortonLifeLock to aggressively increase revenue while achieving its $3 adjusted earnings per share target in the coming years. Although we think NortonLifeLock is executing well in finding growth in consumer safety and are optimistic about the opportunities the merger with Avast brings, we remain cautious about the consumer security market and the ability to drive sustainable long-term growth amid a competitive pricing environment. As a result, we view shares as modestly overvalued and believe investors should wait for a larger margin of safety.