Shares of cybersecurity company Symantec (NASDAQ:SYMC) rose 18.1% in August, according to data provided by S&P Global Market Intelligence, driven by a strong earnings report and a handful of analyst upgrades.
Symantec reported first-quarter revenue of $884 million, down 3% year over year but about $7 million higher than the average analyst estimate. The consumer security segment generated $403 million of revenue, down 6.3% year over year, while the enterprise security segment produced $481 million, flat compared to the prior-year period.
Non-GAAP earnings per share came in at $0.29, up from $0.26 during the prior-year period and $0.04 higher than analysts expected. GAAP EPS rose 29% to $0.22, despite the decline in revenue. Cost-cutting was the main driver of earnings growth, with GAAP operating expenses declining by 6% year over year.
Following Symantec's first-quarter report, positive analyst commentary helped to further drive up the stock price. Both Goldman Sachs and Morgan Stanley initiated coverage, rating the stock a " buy" and "overweight," respectively, with price targets of $26 and $27. Consolidation in the industry and the company's acquisition of Blue Coat earlier this year were factors driving the bullish price targets. A few days later, Citigroup upgraded the stock from "neutral" to "buy," attaching a price target of $26.50.
The Blue Coat acquisition should have a meaningful impact on Symantec's results going forward. The acquired company produced nearly $600 million of revenue in the fiscal year ending in April, along with a non-GAAP operating margin of 22%. Symantec expects to wring out $150 million of cost synergies from the acquisition, in addition to $400 million of additional cost savings from a previously announced plan.
Despite a revenue decline during the first quarter, improved profitability and a spate of analyst upgrades propelled the stock higher in August.
Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.