Having taken its lumps, this tech company may be on the verge of a big turnaround, asserts Scott Kessler in Standard & Poor’s The Outlook.

Symantec (SYMC) carries S&P Capital IQ’s highest investment recommendation of 5-Stars or strong buy.

The firm is a leader in global security software with a well known and well respected consumer brand and a significant base of business customers.

In 2014, Symantec announced plans to separate into two publicly traded companies. One company—Symantec—was to be focused on security and the other—Veritas—focused on information management (i.e. storage).

In August 2015, Symantec announced the pending sale of Veritas for $8 billion to private equity firm Carlyle Group (CG), subject to approvals.

We see the deal closing by early 2016, and net proceeds to Symantec of over $6 billion. With the Veritas deal, we think Symantec will be able to focus more effectively on its operation and on opportunities.

Perhaps most importantly, we think Symantec will pursue acquisitions intended to enhance its technology and talent, with an emphasis on growth areas and product categories such as mobile.

We see the company leveraging its notable assets and newfound financial flexibility to pursue private investments and acquisitions.

We also see the Veritas proceeds enabling the company to make more internal investments, pursue growth-driven M&A, and commit additional capital to stock buybacks and dividend payouts.

We acknowledge the negative sentiment around the company due to inconsistent execution and lack of growth. And short interest for the shares was recently the highest it has been in some seven years.

However, we see Symantec soon completing a transformative transaction that we think could fundamentally change the company for the better.

We believe now is the time to consider Symantec, before the deal is consummated and the company starts reaping the benefits.

The stock trades at a considerable P/E discount to peers and has a considerably higher dividend yield than the technology sector or S&P 500. We view the stock as a compelling value.

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