Symantec Named in “Most Dangerous Stocks” List

A few days ago our friends over at New Constructs released their Most Dangerous Stocks for June list and we couldn’t help but note that Symantec (SYMC) was added to the large cap list.

The stock has had a great short term rally since we published our research note on April 30th, highlighting the challenges the company is facing in their core market according to their customers. We recommended it as a short but on a fundamental versus a trading basis.

With the stock up from $17 and change to about $21 we feel the short is looking more attractive. Our price target remains $14.

The company will be hosting their analyst meeting on June 12th and we expect more general enthusiasm around the meeting since management is very good at telling analysts and investors what they want to hear.

Insiders have been selling heavily with no buying. The CEO, John Thompson, has taken $3.5M out in May alone.

Sentiment on the name has improved but there continues to be room for more upside if management gets more analysts over to their way of thinking around the meeting. Despite the recent stock move, the analyst community is mostly at a Hold (20) with 12 at Strong Buy/Buy and 1 lone Sell rating.

We’re currently short the name but secretly hoping for some further share appreciation and further confirmation of our concerns on the fundamentals.

Anyone long or short SYMC should read the research note above as it contains quite a bit of customer data that loudly suggests management is out of the loop on the fundamentals.

Comments

[sophocles]

Would you mind naming some other dangerous stocks for June and beyond?

Thanks.

[Daniel Jacome]

I'd short it on just the chart alone -- ugly set up and it's due for a pullback to around the gap up level, $18-$20 bucks. When the sell side wakes up, get ready for gap retracement.

[User 168812]

Disagree completely with your assessment and New Constructs as well. Many analysts think that Symantec has turned the corner after the Veritas acquisition and is well on its way back down the right path.