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Symantec Recovers on Investigation Disclosure Expectations

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Shares of Symantec Corporation recovered part of last Friday’s losses, yesterday, after the company announced a conference call to discuss the ongoing investigation, post market close, which investors believe, will throw light on its internal probe.

It should be noted that the company, during the fourth-quarter 2018 earnings conference call, had announced that its board’s audit committee is making an internal investigation into concerns voiced by an ex-employee. The company did not divulge details on the nature of the investigation, however, it stated that it isn’t related to any security breach or concern regarding products and systems.

Lack of clarity on the probe announced, along with executives’ refusal to take questions post the earnings conference call, resulted in a plunge of more than 33% in Symantec’s shares, last Friday, eroding almost $6 billion of the company’s market cap in a single day.

However, the stock recovered 9.6% yesterday, following the company’s conference-call announcement. Though Symantec did not reveal much about the internal probe, its announcement reinstated investors’ confidence, reflected by the stock’s 2% improvement, at the after-hour trading.

Notably, the stock has underperformed the industry in the year-to-date period. The industry, to which it belongs to, has gained 12.9%, while Symantec has lost 23.7%.


 

The cyber-security provider noted that the probe relates to the reporting of certain non-GAAP accounting measures, which includes executive compensation too, public disclosures including commentary on the company’s historical financial results, certain forward-looking statements, stock trading plans and retaliation.

Nevertheless, investors heaved a sigh of relief when Symantec mentioned that it “does not anticipate a material adverse impact on its historical financial statements” at this time.

However, we believe its too early to predict what picture the investigation would paint, going forward. This is expected to throw light on serious issues which might severely cost the company in near future. Therefore, it is wise to wait and watch for some time for better visibility of the stock.

Symantec currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are PTC Inc. (PTC - Free Report) , Citrix Systems, Inc. and Cadence Design Systems, Inc. (CDNS - Free Report) , all sporting a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected EPS growth rates for PTC, Citrix Systems and Cadence Design are 38.2%, 9.1% and 12%.

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