NortonLifeLock (NLOK) recently confirmed that it is in advanced discussions with cybersecurity firm Avast (GB:AVST) on a cash-and-stock merger deal, in a bid to expand its consumer software portfolio. The deal is expected to close by the end of this month.
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The deal will be beneficial for the prospects of NortonLifeLock, whose market value stands at almost $16 billion. Notably, Avast has a 435 million strong active user base and a market value of $7.2 billion. Therefore, its inclusion will complement NortonLifeLock’s portfolio of 23 million direct customers. (See NortonLifeLock stock chart on TipRanks)
Notably, NortonLifeLock and Avast are both benefiting from an increase in demand for cybersecurity-related products due to the constantly evolving cyber threats. The companies are witnessing strong demand for their solutions, as reflected by their strong customer base. The amalgamation of the two leading players of cybersecurity will not only strengthen offerings from the combined company, but will also boost its competitive position in the industry.
Following the announcement, Barclays analyst Saket Kalia reiterated a Buy rating on NortonLifeLock, while raising the price target to $32 from $31, implying a 18.9% downside potential to current levels.
Kalia raised his outlook on the prospects of NortonLifeLock to account for lower interest expense and other factors.
Consensus among analysts is a Strong Buy based on 6 Buys and 2 Holds. The average NortonLifeLock price target of $29.29 implies 8.8% upside potential to current levels.
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