Deutsche Bank analyst Patrick Colville upgraded the San Jose, Calif., company to buy from hold after the stronger-than expected earnings report and also raised his share-price target to $23.50 from $20.50.
McAfee stock recently traded at $21, up 8%. It has jumped 25% in the past three months amid the growing use of computers and the Internet during the COVID pandemic.
As for the earnings, the company reported adjusted earnings 38 cents a share on revenue of $777 million for the fourth quarter. The revenue topped the FactSet analyst consensus of $738.6 million.
The "[consumer] security franchise looks to be in better health than even we thought," Colville said in a commentary.
The unit is “best in class” and will sustain its strength, he said. Continued growth in personal computer sales and Internet usage will boost McAfee, he said.
To be sure, Colville is wary of slowing billing trends and "lackluster reseller commentary." But the fact that the company would consider separating the enterprise business is a plus, he said.
A spinoff could push McAfee shares up 20%, he said. The enterprise segment beat earnings estimates, boosted by sales of noncore products, he pointed out.
McAfee, founded by tech eccentric John McAfee, raised $740 million in its initial public offering of 37 million shares in October. McAfee founded the company in 1987 and ran it until 1994.