Gen Digital Earnings: Strong Close to the Year; Focus on Innovation and Expansion Pays Off

Gen Digital reported solid fourth-quarter fiscal 2025 results that exceeded our expectations on both the top and bottom lines. The firm's sales grew 5% year over year, driven by an uptick in its user count and partner channel sales, with margins expanding on the back of continued focus on fiscal discipline. Management views that, while Gen is not immune to downturns, the subscription-based and auto-renewing business will be resilient to macroeconomic uncertainty, supported by strong demand for cyber safety. However, we think that as a consumer-facing cybersecurity player, Gen is more susceptible to macro headwinds, with individuals more prone to cutting their security spending. Thus, we maintain our fair value estimate of $25 per share, and with the stock trading slightly higher after hours, we see Gen as fairly valued.