Already buoyed by a spate of virus outbreaks,
is now generating debate on Wall Street about whether recent price hikes will prompt the security software maker to raise guidance next month.
In a note Tuesday, Friedman Billings Ramsey analyst Nitsan Hargil said he believes Cupertino, Calif.-based Symantec will raise guidance on its next earnings call to account for the price hikes. On Thursday, Symantec raised prices by $5 on subscriptions for several of its Norton antivirus products.
"Although many believe that the price increase was included in management guidance, we strongly disagree," Hargil wrote. "We believe it is unlikely SYMC would reveal a potential price raise to competitors or customers, who could subsequently take action to mitigate its positive impact to the company."
Hargil, who has an outperform rating on Symantec, said he expects the company's next earnings call, for the fiscal second quarter ending Oct. 3, to be scheduled the third week of October. (His firm has not done banking business with Symantec.)
Company spokesperson Genevieve Haldeman on Tuesday declined to comment on whether the company's latest guidance, provided Aug. 18, included the price increases. "All I can say is, we have not yet changed guidance," Haldeman said. "The guidance obviously incorporated what we knew at the time."
On Aug. 18, in an announcement about a lawsuit settlement, Symantec reiterated guidance for the second quarter, saying the company expects GAAP earnings of 38 cents a share and pro forma earnings of 41 cents a share based on revenue at the midpoint of a range from $375 million to $395 million.
Symantec also left estimates for the full year unchanged at $1.96 a share in pro forma earnings on $1.67 billion in revenue.
The consensus estimate calls for pro forma earnings of 42 cents a share on revenue of $390.4 million in the second quarter and earnings of $1.97 a share on $1.67 billion in revenue for the full year, according to Thomson First Call. Hargil boasts the highest estimate on the Street, projecting Symantec will bring in 46 cents a share in earnings on $407.9 million in revenue in the second quarter and $2.03 a share in earnings on $1.73 billion in revenue.
Last week, U.S. Bancorp Piper Jaffray analyst Gene Munster took a different view of the price increases.
In a note, Munster wrote that he believes the earnings impact from the price increases is already reflected in company guidance.
However, Munster also told investors to expect shares to move higher in the near term, although he has an underperform rating on the stock. "We believe recent virus and worm outbreaks are having a dramatic positive impact on Symatec's consumer and, to a lesser degree, small-business sales," he wrote.
In an earlier note, Munster highlighted a soaring increase in retail sales tracked by The NPD Group. For the week of Aug. 10 to Aug. 16, Symantec posted a whopping 137% increase in sales over the previous week, according to NPD. That was the same week the so-called Blaster virus hit computers worldwide, followed in short order by the Sobig worm.
"Clearly, this is a significant positive for Symantec's business," Munster said Tuesday. But "it's hard to carve out whether any sort of fluctuations in guidance are attributable to the underlying demand environment right now or a price increase." (Munster's firm hasn't done any banking business with Symantec.)
Shares of Symantec have climbed $10.25, or 21.6%, since Blaster emerged Aug. 11. Shares of Symantec were up 24 cents, or 0.42%, at $57.66 in recent trading.