On February 22, 2014, we posted our Nasdaq 100 Watch List with the following commentary on Symantec (found here):
“Symantec (SYMC) tops our watch list again. SYMC was last recommended back on April 27, 2012. In our June 10, 2012 posting, we said the following:
“‘In the case of Symantec and Electronic Arts, they have come full circle after a 2-year period. This cycle is not unusual for most of the stocks that we track. Even when the stock does not approach the prior low of a watch list, many stocks attain a 52-week low after 2 to 2.5 years (as in the NVDA example above). Be on the lookout for stocks that have similar cycles like EA, SYMC and NVDA since their ability to replicated such moves adds to the prospect that they could pull a repeat performance.’
“As can be seen in the chart above, the two year cycle that was observed appears to be asserting itself on SYMC. We don’t see why the stock couldn’t decline a bit further until April or May. As is usually the case, losses were incurred initially. Also, our call to sell the principal was early. However, the +46% gain that was achieved from April 27, 2012 to May 13, 2013 has been secured.”
On March 21, 2014, Symantec (SYMC) fell as much as –14.15% to $17.95 after it was announced that the CEO was fired. When we said, “…we don’t see why the stock couldn’t decline a bit further until April or May…” we didn’t expect that CEO would be let go in such a fashion. However, we believe that the cycle in the stock is asserting its influence.
According to Value Line Investment Survey dated February 14, 2014, SYMC is fairly valued at $21 based on 2013 cash flow. Long term debt for SYMC has remained steady since 2006 while shares outstanding have been unchanged since 2004.
Already SYMC has managed to achieve Edson Gould’s Speed Resistance Lines conservative downside target of $21.27 with the extreme downside target of $9.03 far below the current price. According to Dow Theory, SYMC has the following downside targets:
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$17.60
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$15.60
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$13.80
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$11.90
Though a tech stock, SYMC seems to fit better in the Dow Theory assessment rather than the Edson Gould SRL. Dow Theory says that SYMC has a fair value at $18.55. The prospects are that SYMC will trade in a range slightly above or below the DT fair value level.