Yahoo Finance Here's Why Gen Digital (GEN) is a Promising Portfolio Pick Now
Gen Digital GEN is one stock investors should consider adding to their portfolio to benefit from its upside potential. Shares of GEN have gained 8.8% year to date (YTD) compared with the Zacks Business – Services sector’s growth of 2.5%.
This impressive performance comes amid broader market volatility and reflects the company’s back-to-back quarters of impressive financial performance, favorable industry trends and strong fundamentals.
Here’s an in-depth look at why Gen Digital stock might be worth adding to your portfolio right now.
Strong Growth Prospects
Gen Digital has demonstrated a decent financial performance in the past four quarters, with its non-GAAP earnings beating the Zacks Consensus Estimate in two of the trailing four quarters while matching the same on one occasion and missing once, the average surprise being 0.52%.
Gen Digital Inc. Price and Consensus
Gen Digital Inc. price-consensus-chart | Gen Digital Inc. Quote
In its latest reported financial results for fourth-quarter 2024, both revenues and earnings beat the respective consensus mark and improved year over year.
GEN’s guidance for full-year 2025 has been optimistic too, projecting revenues between $3.89 billion and $3.93 billion, which indicates year-over-year growth of 3.6% at the midpoint. It forecasts non-GAAP earnings in the band of $2.17-$2.23 per share, implying growth of 12% at the midpoint. This forecast suggests continued confidence in Gen Digital’s ability to capture market presence and expand its customer base.
The Zacks Consensus Estimate for 2025 revenues and non-GAAP earnings is pegged at $3.91 billion and $2.24 per share, respectively. This indicates a year-over-year improvement of 2.3% in the top line and 14.3% in the bottom line. The consensus estimate of GEN’s 2025 earnings has remained unchanged for the past 30 days at $2.24 per share.
Positive Industry Trend & Broad Portfolio to Aid Gen Digital
The consumer security market is expected to witness a CAGR of 9% between 2024 and 2029, according to a report by Mordor Intelligence. The consumer security space is growing rapidly in the markets of developing nations in Asia, aided by the growth in the adoption of connected devices. The region is also grappling with the challenges of shadow IT and data leakage due to evolving IT infrastructure.
Organizations and individuals are also facing cybersecurity-related challenges in the realm of identity management. This report by CyberArk CYBR suggests that 93% of organizations have faced identity-related threats in the past two years. Gen Digital, alongside its other cybersecurity products, also provides identity protection products, including LifeLock Identity Theft Protection, Avast and AVG Secure Identity, and Norton Identity Theft Protection that have significant scope of market expansion.
The identity management market is led by players like CyberArk that work with the fortune 500 companies in this space. This does not stop Gen Digital to benefit from expansion in its market share as its target customers have always been small and medium businesses (SMBs).
GEN is continuously attracting SMBs by rolling out solutions like Norton Anti-virus software. A report by Cisco CSCO shows that 72% of SMBs have dedicated employees for threat hunting, 56% have daily or weekly security patch routine and 86% have clear metrics for determining the effectiveness of security.
The SMB cybersecurity market offers significant expansion opportunities for Gen Digital, though it faces competition from established players like Cisco.
CSCO's solution, Cisco Umbrella, provides DNS-layer security to block malicious domains. However, the anticipated secular growth of the cybersecurity space gives ample scope for expansion to all its players.
The wide brand portfolio of Gen Digital that include Norton, Avast, Avira, AVG and CCleaner offerings provide stability in the long run by providing it revenue diversification. These brands and their offerings provide a range of malware, viruses, adware, ransomware and other online protection to PCs, Macs and mobile devices.
GEN also provides VPN solutions through Norton, Avast and AVG brands. With all these offerings under the hood, the company has been able to acquire 500 million users in more than 150 countries as discussed in its 2024 annual report.
Conclusion
We consider that Gen Digital represents a strong investment choice due to its robust market position, steady revenue growth, product diversity and favorable industry trends.
Gen Digital carries a Zacks Rank #2 (Buy) and has a Growth Score of B at present. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a Growth Score of A or B offer solid investment opportunities.
Another top-ranked stock worth considering in the broader technology sector is NVIDIA Corporation NVDA. The stock currently sports a Zacks Rank #1 and has a Growth Score of A. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 revenues is currently pegged at $116.4 billion, indicating year-over-year growth of 91%. The consensus mark for earnings is pegged at $26.84 per share, implying year-over-year growth of 107%. NVDA stock has surged 121.4% YTD.
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Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Gen Digital Inc. (GEN) : Free Stock Analysis Report
CyberArk Software Ltd. (CYBR) : Free Stock Analysis Report
