Symantec ( SYMC ) announced its Q1 results last week that showed solid revenues growth of 15% to$1.6 billion. Its two most important business segments - Storage & Server Management and Consumer Products (Norton), which comprise almost 75% of the Trefis price estimate for Symantec - reported steady revenue growth for the quarter despite strong competition from McAfee by Intel ( INTC ) and Microsoft ( MSFT ) in the security segment as well as EMC ( EMC ), IBM ( IBM ), NetApp (NTAP) and Hewlett-Packard (HPQ) in storage software.
We have revised our Trefis price estimate to about $20 following the earnings release implying around 10% upside to the current market price.
Here are some the key trends driving Symantec's growth
1) Continued Growth in the consumer security business
Norton Antivirus and Security suite makes up its consumer business and contributes almost one third of the total revenue. This is growing at low double digit growth rate consistently.
Norton Security is the most popular consumer anti-virus software, and Symantec recently launched a new version of Norton Mobile Security for Android and so is now tapping the fastest growing mobile platform. It also improved its Norton Online Family offering with a mobile application.
As its 45% market share of the global consumer antivirus market is gradually declining, Norton hopes that these new offerings will help stem this slide and maybe even gain additional market share over time. Norton will be a major driver for Symantec's stock price in the future.
You can tweak our Trefis model for Symantec to see how Norton will impact Symantec's stock price.
2) Storage Software Sales Expected to Increase Following Clearwell Acquisition
Storage and server management software accounts for almost 40% of the total revenue by Symantec and makes up more than 40% of our valuation for Norton.
Backup applications like NetBackup, Enterprise Vault have seen double digit sales growth, and Symantec Clearwell acquisition in June will help expand its offerings as a database storage specialist.