Shares of Symantec Corp. (SYMC - Analyst Report) reached a new 52-week high of $24.93 on Friday, May 3, 2013, above its previous high of $24.91.
The closing price of the memory-chip maker on May 3 was $24.84, representing a decent one-year return of about 67.4% and year-to-date return of approximately 44.5%. The company has traded 7.5 million shares over the last 30 days.
SYMC delivered positive earnings surprises in the last four quarters with an average beat of 18.2%. This Zacks Rank #2 (Buy) company has a market cap of $12.1 billion and long-term expected earnings growth rate of 8.0%.
Decent Third Quarter Earnings, Cost saving through layoff
Symantec Corp. Symantec reported revenues of $1.79 billion in the previous quarter, up 4.4% year over year from $1.72 billion and above the Zacks Consensus Estimate of $1.73 billion. Year over year, the company witnessed increase in revenues in the Consumer segment, Security and Compliance segment, and Storage & Server Management segment.
Moreover, Symantec Corporation reported earnings per share (EPS) of 40 cents in the third quarter of 2013, comfortably beating of the Zacks Consensus Estimate of 33 cents.
Moreover, the balance sheet and cash flow numbers also improved sequentially. Symantec registered cash, cash equivalents and short-term investments of $4.3 billion, slightly up from $4.0 billion in the prior quarter. While cash flow from operating activities was $463.0 million versus $178.0 million in the prior quarter.
Although management did not provide any explicit guidance, itexpects revenues and deferred revenues for the fourth quarter 2013 to grow 1%–3% year over year on a constant currency basis. Moreover, Symantec is also planning to save cost by downsizing managers and staff across certain operating divisions in order to boost operating margins. While new product launches might increase research and development expenses, a stronger pricing environment should prove beneficial.
Factors driving the stock
The company has already started to transform itself thoroughly through cost reduction, new technology enhancements and expanding reach across markets. Better customer relationship management will also improve business opportunities for Symantec. The company intends to roll out new security solutions in the mobile security market and is also targeting the smartphone segment in order to take market share from Netquin Mobile.
Symantec has been delivering decent results over the last few quarters. We expect revenue growth across the different business segments, with new opportunities coming in the mobile computing segment.
Moreover, the company has been able to protect its leading position in the IT security market, with a good mobile strategy in place. This apart, the restructuring initiatives (that would boost margins and eventually earnings), the cost reduction initiatives and the appointment of a new CEO will help the company progress further.
Other Stocks to Consider
Other stocks in the technology industry that are currently performing well and have a solid visibility include Aspen Tech Inc. (AZPN - Snapshot Report), and Progress Software (PRGS - Snapshot Report) with a Zacks Rank #1 (Strong Buy).