Analyst Note| Mark Cash |
No-moat NortonLifeLock’s 3% year-over-year revenue growth (6% growth excluding divested ID Analytics business) and non-GAAP EPS of $0.38 slightly topped FactSet consensus estimates in the third fiscal quarter. The company had solid demand through the holiday season, is expanding internationally, and channel partnerships are gaining traction. Adjusted operating margin was 51%, up from 36.2% a year ago, showcasing the concerted cost extraction efforts management has taken since jettisoning the Symantec enterprise security business. With higher expectations around growth internationally and the overall ability to upsell and retain customers, we are raising our fair value estimate to $19 from $17 and still view shares as overvalued.