Symantec Corp. shares rally Wednesday following reports that Broadcom Ltd. is in late stage talks to acquire the cybersecurity software company and analysts...
Symantec Corp. shares rallied Wednesday following reports that Broadcom Ltd. was in late stage talks to acquire the cybersecurity software company, and analysts drew parallels to the chip maker’s acquisition of another struggling software firm.
Symantec has had problems recently. Back in May, the company reported poor performance and the departure of its chief executive, while a year before that the company announced an internal audit and Securities and Exchange Commission investigation but didn’t have to restate financial results. The SEC probe is ongoing as evidenced in recent correspondence between Symantec and the regulator.
Piper Jaffray analyst Harsh Kumar, who has an overweight rating on Broadcom and a $330 price target, said the deal passes his “smell test.” “We see this as the biggest hurdle for Broadcom in order to potentially achieve its financial objectives,” Kumar said. “In our view, the enterprise segment must show the potential to reach at least a 45% operating margin under the Broadcom umbrella in order for a deal to make sense.
Mizuho analyst Gregg Moskowitz, who recently upgraded Symantec to a buy from neutral, said Symantec’s business is ripe for improvement and that Broadcom could be better suited to the task.
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