Cutting Symantec's Fair Value

After reassessing our view on

Symantec’s tepid fourth-quarter guidance was already closer to what we were modeling in our forecast period, but we’ve lowered future growth beyond fiscal 2020. We believe Symantec operates in an industry where trust is paramount above everything else. A consumer trusts Symantec to protect their computer from Malware with their Norton product or LifeLock to protect them from identity theft and fraud. Enterprises trust Symantec to defend their endpoints or cloud applications. In reporting an internal audit, a potential delay in the filing of the firm’s 10-K, and in failing to quell concerns regarding the potential severity of the issues raised, Symantec has, in many ways, violated that trust. If the firm possessed customer switching costs, Symantec’s crisis could make it an attractive opportunity, but if customers do not feel comfortable with Symantec, they will choose a competing product, marring the firm’s growth and compressing margins.

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