DD: Long Boomer Stonk
TL/DR: long NLOK, buying cheap OTM LEAPs for January ’23, ez tendies
have been following the cyber-security market a bit since the McAfee special dividend rocket that happened a few weeks ago, thought it was a boring space, but found a decent long opportunity.
Cyber-security market is expected to rocket 🚀🚀🚀🚀🚀🚀🚀
Companies have been splitting cyber-security for consumers and enterprise:
NortonLifeLock split off it’s Enterprise business in 2019 to focus on consumer cyber-security
Main competitor, McAfee split off Enterprise business in 2021 to focus on consumer cyber-security
The consumer market has huge potential, with cyber-security spending to continue growing, especially in developing markets as device ownership increases and adoption of peripheral services increase (eg: identity theft protection)
The largest 3 players in the consumer space by enterprise value are:
- Norton: $18B
- McAfee: $15B
- Avast: $6.6B
Norton is already undervalued:
This value is not priced in. McAfee is trading at a 21.64x forward P/E multiple compared to NLOKs 15.5x forward P/E multiple. If Norton starts to trade closer to industry average P/E multiple, the upside is HUUUUGE
The #1 and #3 players are merging:
NortonLifeLock (NASDAQ: NLOK) and Avast (LSE: AVST) announces third largest cyber-security merger
They expect to generate $280M in cost synergies, presumably from the high overlap in products. That value at a P/E multiple again is pure 🚀🚀🚀🚀🚀🚀
The analyst ratings for NLOK today put their guidance at $28, only 6% upside, but this was all before the merger announcement. When these two giants merge, they will outcompete McAfee and take over this giant market.
bear case? regulators fuck this shit up
Not financial advice.
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August 31, 2021 at 08:34PM