Up 60% from its low in March 20
Up 60% from its low in March 2020, on the present value of $27 per share, we imagine NortonLifeLock inventory (NASDAQ: NLOK) has additional upside potential. NortonLifeLock, a cybersecurity software program and providers supplier, has seen its inventory rise from $17 to $27 off its March 2020 low, lower than the S&P which elevated by virtually 90% from its lows. Additional, the inventory is up solely round 30% from the extent it was at earlier than the pandemic. We imagine that NLOK inventory may rise at the very least 10% to set recent highs above $30, pushed by expectations of regular demand progress, and robust full-year 2021 earnings. Our dashboard What Components Drove 44% Change In NortonLifeLock Inventory Between 2018 And Now? has the underlying numbers behind our considering.
NLOK inventory’s rise since late 2018 got here regardless of roughly unchanged revenues, which stood at round $2.6 billion in FY 2019 and FY 2021 (NLOK’s fiscal yr ends in March). Nonetheless, mixed with a 3.5% drop within the excellent share depend, RPS (revenue-per-share) rose 3%, from $4.20 to $4.30 over this era.
Nonetheless, NortonLifeLock’s P/S (price-to-sales) a number of jumped from 4.3x in 2018 to 4.9x by 2020 finish, and has since rallied to six.3x at the moment. We imagine that the corporate’s P/S ratio has the potential to rise additional within the close to time period on expectations of continuous demand progress and a good shareholder return coverage, thus driving the inventory value increased.
The place Is The Inventory Headed?
The worldwide unfold of coronavirus and the ensuing lockdowns has led to work-from-home turning into the brand new norm, thus elevating the necessity for cybersecurity merchandise. NortonLifeLock bought off its enterprise safety enterprise and now focuses solely on shopper safety, the demand for which has risen with individuals shifting to the distant work mannequin. That is evident from the corporate’s full-year 2021 earnings, the place income got here in at $2.55 billion, up from $2.49 billion in FY 2020. A major drop throughout all expense heads noticed working earnings rise sharply from $355 million to $896 million. Nonetheless, a $540 million drop in different earnings over this era meant that regardless of a drop within the efficient tax price, EPS solely rose from $0.94 to $1.18.
Moreover, we imagine demand for the corporate’s merchandise will keep robust, and that revenues stand to profit within the near-to-medium time period. Additional, if the corporate can proceed controlling working bills going ahead, an increase in investor expectations may drive up the corporate’s P/S a number of, serving to the inventory rise to recent highs above $30, an upside of greater than 10% from current ranges.
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