Skip to Content
Stock Analyst Update

Tepid Guidance, Investigation Eclipse Symantec Earnings

While we'll be tracking news of the investigation, our long-term outlook for the firm is currently unchanged.

Mentioned:

 Symantec (SYMC) reported its fourth-quarter and full-year earnings for fiscal 2018, which modestly exceeded our expectations. However, the release was plagued by Symantec’s middling guidance for the ensuing fiscal year, coupled with news that the Audit Committee Investigation of the Board of Directors is investigating Symantec. Full-year 2019 revenue guidance of $4.83 billion at the midpoint and $1.58 in non-GAAP EPS were both a touch lower than we expected. However, looking long term, our views on Symantec are unchanged and we are reiterating our $26 fair value estimate and no-moat rating for the firm.

In terms of the audit investigation, limited disclosure was given in the press release and management did little to quell concerns on the earnings call. It was initially indicated that the investigation is in connection with concerns raised by a former employee and that the Audit Committee of the Board of Directors has sought independent counsel and contacted the SEC that the investigation was proceeding. In addition to the press release, management indicated that the investigation will delay the release of the firm’s 10-K. We will be closely tracking any news of the investigation over the coming weeks to see if it materially impacts our long-term thesis.

In terms of the earnings, we were impressed by the robustness in the Consumer segment, arguably aided by the acquisition of LifeLock, and we would hypothesize that LifeLock benefitted from the Equifax scandal. In terms of Enterprise, the results this quarter and guidance for the next year were modestly below expectations. The assets acquired through the Blue Coat acquisitions are largely low-margin but expected to be high growth. However, enterprise revenue declined 7% for the quarter, although this was impacted by the Web Security and PKI divesture to Digicert.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

William Fitzsimmons does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.