“We favor NortonLifeLock’s focus on consumer security and believe the tuck-in acquisitions add new growth avenues in the long run,” BofA analyst Tai Liani wrote in a commentary.
“However, once we isolate M&A impact, core Symantec (58% of revenues) is not growing, which is a reflection of weak consumer channels the company will have to improve,” Liani added.
Further, “last year’s COVID-related spike in demand may unwind in the next few quarters, and the company may return to negative trends in churn and subscriber additions, negatively impacting the revenue growth,” Liani said.
NortonLifeLock traded Tuesday at $21.49, down 3.22% and has firmed 1% in the past six months.
“On the positive side … the company offers an integrated platform, dubbed Norton 360, that is resonating well with the existing customer base,” Liani said.
“The company also acquired Avira which could accelerate expansion into the International market, currently only accounting for 25% of revenues.”
But “the consumer market is saturated with antivirus/endpoint security vendors, and free solutions have reached feature parity. Key concerns are centered on NLOK’s low growth rate,” Liani said.
One cybersecurity firm that has proven particularly popular with investors is Palantir Technologies (PLTR) - Get Report. It was selected last week by the National Nuclear Security Administration to provide its security platform and related services in a $89.9 million, five-year deal.