H-P Rumor Heats Symantec

Market chatter about a possible buyout of IT security giant Symantec(SYMC Quote), and an analyst report suggesting that the company may be undervalued, drove Symantec shares up nearly 4%.

With large IT players seeking to round off their portfolios by adding a strong line of security products, market buzz that Hewlett-Packard(HPQ Quote) could be eyeing Symantec drove up investor interest in the stock Monday.

Symantec is also trading at a significant discount to its peers, wrote analysts Brian Freed and Paul Gillespie in a Morgan Keegan research report. Morgan Keegan makes a market in Symantec shares.

Shares of Symantec were up 66 cents to $20.59. The company is slightly below its 52-week high of $22.19.

It's not the first time that talk about a possible buyout of Symantec has come up. Through the last six months, the IT security industry has been going through a consolidation phase. In June, storage specialist EMC(EMC Quote) bought authentication security-software company RSA for $2.1 billion.

Two months later, IBM(IBM Quote) bought security company Internet Security Systems for $1.3 billion.

As technology customers seek greater security for their products, technology players such as H-P, Microsoft(MSFT Quote), Oracle(ORCL Quote) and SAP(SAP Quote) are looking to buy security companies to round out their products.

Meanwhile, talks of a possible H-P-Symantec deal has gained ground.

At this point, it looks like a long shot, says Richard Williams, senior software analyst with ICAP, which does not own shares or have a banking relationship with Symantec.