Gen Digital Earnings: Solid Results After Aiming To Optimize Business Following Avast Acquisition

We are maintaining our $21 fair value estimate for no-moat Gen Digital after the firm kicked off fiscal 2024 with financial results largely in line with our estimates. We reiterate our belief that despite being a large fish in the consumer cybersecurity pond, Gen’s long-term financial prospects are restricted by the commodity-like nature of the consumer security market the firm operates in. At the same time, we believe Gen can expand margins as it digests the Avast acquisition and sets its target on building a more efficient combined business unit. Relatedly, we believe Gen can unlock value in Avast’s customer base by improving customer retention and increasing Avast customers’ average revenue per user which still lags Gen’s Norton offering. Following the earnings report, Gen’s shares are trading in the 3-star range and are fairly valued.