On Thursday, Barclays adjusted its stance on Gen Digital Inc (NASDAQ:GEN) stock, shifting the rating from Overweight to Equalweight and decreasing the price target to $25.00 from the previous $28.00.
Gen Digital's valuation was noted as attractive with a sustainable return to subscriber growth. However, Barclays anticipates that the average revenue per user (ARPU) may be limited due to a faster increase in lower-priced products.
This assessment leads to a more conservative revenue forecast for FY25 compared to the Street's expectations. Additionally, while earnings per share (EPS) estimates were trimmed based on the revised SOFR curve, Barclays still anticipates the company's guidance to align with its 12-15% EPS growth framework.
In contrast, the firm showed optimism for PTC (NASDAQ:PTC), highlighting that the guide for net new Annual Recurring Revenue (ARR) appears beatable. The positive indicators include U.S. Purchasing Managers' Indexes (PMIs) being in expansion territory and the potential for the FY24 guidance midpoint to increase. Barclays suggests that PTC's stock could gradually appreciate given its reasonable valuation against FY26 Free Cash Flow (FCF) projections.
For Varonis Systems (NASDAQ:VRNS), Barclays expects the net new ARR to surpass expectations. The firm believes that the Market-Driven Demand Response (MDDR) could have a more significant impact than the Copilot for M365 opportunity in the first half of the year, considering the pricing uplift and the chance to encourage Software as a Service (SaaS) conversions.
Regarding Intapp (INTA), Barclays predicts that the friction experienced in new product introductions last quarter could diminish, leading to greater stability in net new ARR. This potential improvement, coupled with the current valuation, could trigger a reversion to the mean in the stock's multiple.
Lastly, for Tenable Holdings (NASDAQ:TENB), the firm expects margins to be positively set up, especially since the reduction in force (RIF) occurred early in the quarter. This, combined with a potentially beatable Customer Contract Billing (CCB), could result in higher unlevered Free Cash Flow (uFCF) estimates. However, Barclays notes that TENB will not update its uFCF guidance until the second quarter.
InvestingPro Insights
As Gen Digital Inc (NASDAQ:GEN) navigates through market expectations and analyst reassessments, key financial metrics and insights from InvestingPro paint a detailed picture of the company's current standing. With a market capitalization of $14.23 billion and an attractive P/E ratio that has adjusted to 7.98 in the last twelve months as of Q3 2024, the company showcases a robust valuation framework. The notable revenue growth of 22.05% during the same period underlines Gen Digital's ability to expand its financial reach, complemented by a substantial gross profit margin of 80.72%. These figures indicate a company with a solid grasp on profitability and efficiency.
InvestingPro Tips highlight the potential undervaluation of Gen Digital's stock, as evidenced by a PEG ratio of just 0.07, suggesting that the stock's price may not fully reflect its earnings growth potential. Additionally, the company's strong operational performance is reflected by an operating income margin of 41.88%, which could be a reassuring signal for investors looking for stable returns. For those interested in further insights and tips, InvestingPro offers additional guidance—there are 5 more tips available for Gen Digital Inc, which can be accessed with a subscription. Readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing an even deeper dive into the company's prospects.
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