Is Wall Street Too Jaded About McAfee's Upside Potential?

McAfee Corp. (NASDAQ: MCFE) has endured a long and complex history in the data security industry. There have been multiple owners and deals around the company, but the 2020 IPO saga brought this company back into the light. Unfortunately for McAfee shareholders, this has traded as a busted initial public offering. There is also the notion that the quiet period expiration allowing analyst coverage from its underwriting firms may have not added enough excitement.

McAfee’s IPO of 37 million shares priced at $20 per share, but last Friday’s close ahead of the quiet period expiration was just $17.16. The post-IPO range in the days since its debut has been $15.42 to $19.78.

24/7 Wall St. has not tracked down every single analyst report that may have been issued or may be coming out, but we have seen the reports from the major firms. It appears that some of the less than aggressive targets may be weighing on the stock’s upside.

According to McAfee’s release around its IPO date, Morgan Stanley and Goldman Sachs were listed as the lead book-running managers for the offering. TPG Capital, BofA Securities and Citigroup were also listed as lead book-running managers.

Other joint-bookrunning managers were listed as RBC Capital Markets, Deutsche Bank, UBS, HSBC and Mizuho Securities. Another layer of co-managers included Evercore ISI, Piper Sandler, Stifel, Academy Securities, Blaylock Van, C.L. King, Ramirez & Co. and the firm Siebert Williams Shank.

The primary underwriters should be given the most attention considering they should have placed the most stock, but that is not always the case. McAfee was started as Overweight with a $25 target at Morgan Stanley. Goldman Sachs started it as Buy with a $26 price target.

It looked impressive that the two top firms in the syndicate had such strong upside targets, but the rest of the calls were more mixed. That was barely generating a 1% gain on Monday.

The second layer of underwriters showed only a Neutral rating and $19 price objective from BofA Securities. A rating from Citigroup (nor TPG) has been seen as of yet. Other calls were seen as follows:

  • Mizuho started McAfee with a Buy rating with a $25 price target.
  • Piper Sandler started it as Outperform with a $22 price target.
  • RBC Capital Markets started McAfee as Sector Perform with a $19 target price.
  • UBS started the security player as Buy but only with a $20 price target.

McAfee shares were last seen trading up 1.1% at $17.35 on Monday. Refinitiv has not published a consensus as of this time but these 7 analyst calls so far would tally up to roughly a $22.28 consensus without consideration of any other analyst calls that have yet to be seen or issued.