Analyst: Symantec Stock "Dead Money" After Profit Warning

Symantec is on track for its fifth straight loss

Managing Editor
May 10, 2019 at 10:03 AM
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In early April, Symantec Corporation (NASDAQ:SYMC) stock was trading at its highest point in almost a year on a big bull note from Goldman Sachs. What a difference a month makes, as the cybersecurity specialist is now down 15.7% to trade at $18.69 this morning, on track for its worst day in nearly a year.

While fiscal fourth-quarter adjusted earnings arrived in line with expectations, revenue missed estimates, and the company issued a current-quarter profit warning. Plus, Symantec unexpectedly announced the immediate exit of CEO Greg Clark, who will be replaced on an interim basis by board member Richard Hill. 

A flurry of bear notes have ensued, with many calling the results "disappointing," "frustrating," and "absolutely awful." No fewer than six brokerages have issued price-target cuts already, including Credit Suisse to $18 from $23, on concern current leadership has limited industry experience. Plus, Wedbush said Symantec should pursue strategic alternatives, while Baird called SYMC shares "dead money."

On the charts, this is shaping up to be Symantec's fifth straight loss, and its worst weekly performance since this time last year. The shares breached support at their 100-day moving average, have now given back their year-to-date gains -- closing in on their Dec. 26 bottom of $17.42. 

The data out of the options pits shows a strong preference for long calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 6,757 SYMC calls were bought to open in the past two weeks, compared to just 1,246 puts.

Echoing this, SYMC sports a Schaeffer's put/call open interest ratio (SOIR) of 0.23, indicating that call open interest easily surpasses put open interest among options expiring within the next three months. This SOIR is in the 5th annual percentile, suggesting short-term options traders have rarely been more call-biased in the past year.

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