Company Reports

Narrow-moat Check Point Software Technologies reported second-quarter numbers that were broadly in line with FactSet consensus. However, future business indicators are improving with 10% growth in billings, three large deals signed in the quarter totaling $130 million in bookings, and a return to growth in the product line with good demand for the new Quantum Force gateways. Shares were up around 6% intraday in response. We don’t expect to make a material change to our $155 per share fair value estimate. At current levels, the shares look fairly valued.

Check Point Software Technologies is a leading vendor in the cybersecurity market. It generates revenue from selling products, licenses, and subscriptions to protect networks, cloud environments, endpoints, and mobile users. Check Point has transformed from its roots as a firewall pioneer into an enterprisewide security provider.

Narrow-moat Check Point Software Technologies reported first-quarter numbers that were slightly above FactSet consensus and the midpoints of guidance on revenue and EPS. However, on the call management indicated customers are still hesitant and it was not yet seeing budgets being opened for major purchases. This is leading to a more competitive environment with at least one major competitor announcing an aggressive pricing strategy. Consequently, an uptick in sales growth is more likely to be seen in the second half of fiscal 2024. Shares declined around 4% intraday in a down day for most of the sector. We don’t expect to make a material change to our $150 fair value estimate. At current levels, the shares look fairly valued.

Narrow-moat Check Point Software Technologies reported fourth-quarter 2023 numbers that were above FactSet consensus and slightly above the EPS guidance range. Overall, total revenue growth remained modest at 4% as 15% growth in subscriptions was dampened by declining product sales (firewalls). However, positive momentum was evident this quarter as product orders increased by double digits, which should return product revenue growth to positive levels in the second half of 2024. Furthermore, new business growth for the group was in double digits following three to four quarters of declines. Shares finished up 1% intraday. We don’t expect to make a material change to our $150 fair value estimate. Shares have rallied in recent months and now look fairly valued.

Narrow-moat Check Point Software Technologies reported third-quarter numbers that were slightly above the FactSet consensus and company guidance. Revenue was above the midpoint and earnings per share came in at the very top end of the guidance ranges. Overall, total revenue growth remained modest at 3% as customers continued to delay refreshing their firewall appliances, which resulted in product and license revenue declining 14%. We are updating our model for the latest developments but do not anticipate a material change to our $150 fair value estimate. At current levels, the shares look undervalued.

Narrow-moat Check Point Software Technologies reported second-quarter numbers that were slightly above FactSet consensus and guidance. Second-quarter revenue of $589 million was up 3% versus 2022 with security subscriptions up 14%, and software updates/maintenance up 2%, but products and licenses were down 12%. Guidance for 2023 was confirmed for revenue of $2.34 billion-$2.51 billion and non-GAAP EPS of $7.70-$8.30 (GAAP EPS $6.48-$$7.08). Third-quarter guidance is revenue of $570 million-$605 million with non-GAAP EPS of $1.97-$2.07 (GAAP EPS $1.62-$1.72). Shares closed up 2.6% on the day. We don’t expect to make a material change to our forecast or $150 fair value estimate. At current levels, shares look moderately undervalued.

We are initiating coverage on Check Point Software Technologies with a narrow moat rating and $150 fair value estimate. Our fair value estimate is equivalent to a P/E multiple of 19 times, slightly above its historical average. We are slightly below FactSet consensus on our near-term estimates, yet our fair value estimate is higher than the stock price and consensus sell-side target price. We surmise that we are more optimistic than the market on the success of Check Point’s Infinity cybersecurity platform. Consequently, at current levels the shares look undervalued with a 4-star rating.

Check Point Software Technologies is a leading vendor in the cybersecurity market. It generates revenue from selling products, licenses, and subscriptions to protect networks, cloud environments, endpoints, and mobile users. Check Point has transformed from its roots as a firewall pioneer into an enterprisewide security provider.

We are no longer providing equity research on Check Point Software Technologies. We provide broad coverage of more than 1,500 companies across more than 140 industries and adjust our coverage as necessary based on client demand and investor interest.

We are reiterating our fair value estimates for wide-moat network security vendors Check Point Software Technologies at $140, Fortinet at $340, and Palo Alto Networks at $585 after these more-established firms fell about 20% over the last month. We are also reaffirming our fair value estimates for narrow-moat cloud-based security firms CrowdStrike Holdings at $225, Okta at $280, and Zscaler at $265 after these higher-growth firms retracted by almost 40% over the last month. Our top pick is Okta, but all are trading at attractive valuations, albeit with different growth profiles.

We are maintaining our $140 fair value estimate for wide-moat Check Point Software Technologies after its first-quarter results slightly topped our revenue growth expectations and marginally exceeded our anticipation for adjusted earnings. Check Point's shares dropped by about 4% after reporting, which we attribute to management upholding its previous 2022 targets after a strong first quarter and its billings growth lagging revenue expansion. Shares are modestly undervalued, in our view. Although we expect Check Point to continue lagging the growth of its more aggressively investing network security peers, we think the company possesses robust customer switching costs and benefits by network security spending consolidating around it and other leading vendors with robust security platforms.

We are raising our fair value estimate for wide-moat Check Point Software Technologies to $140 per share from $137 and see shares as modestly undervalued. Our increase comes after its fourth quarter results topped our expectations for revenue growth and earnings. Check Point posted a very strong outlook for 2022 that increased our conviction for a higher growth profile in the near and long terms. We positively view the plan to ramp up investments to fuel growth because it enables Check Point to keep customers locked into its ecosystem as their attack surface expands by using more cloud-based resources. Although we anticipate that Check Point's growth will lag its top peers, expecting its growth to continue an accelerating trajectory in 2022 provides confidence of its durability as a key security provider.

Check Point Software Technologies is a top player in the cybersecurity market. It generates revenue from selling products, licenses, and subscriptions to protect networks, cloud environments, endpoints, and mobile users. Check Point has morphed from its roots as a firewall pioneer into an enterprisewide security provider.

Check Point Software Technologies is a top player in the cybersecurity market. It generates revenue from selling products, licenses, and subscriptions to protect networks, cloud environments, endpoints, and mobile users. Check Point has morphed from its roots as a firewall pioneer into an enterprisewide security provider.

We are upgrading our moat ratings for Check Point Software Technologies, Fortinet, and Palo Alto Networks to wide from narrow. For moat trends, we maintained Palo Alto as positive, adjusted Fortinet to positive from stable, and kept Check Point as stable. The wide moat upgrades also drove fair value estimate increases: Check Point's fair value estimate is now $137 from $132, Fortinet's fair value estimate is upped to $285 from $250, and Palo Alto's fair value estimate has increased to $585 from $550. We view shares in steady but lower-growing Check Point as attractive for patient investors. Palo Alto's shares are a bit undervalued, in our view, and we believe the firm will continue to be a leader and share gainer. We think investors should wait for a pullback in Fortinet's shares.

We are maintaining our $132 fair value estimate for narrow-moat Check Point Software Technologies after its third-quarter results came in lower than our expectations for revenue, but higher for earnings. As with previous quarters, we frame the results as solid and steady, but Check Point’s growth continues to lag its peers in a high-demand environment for cybersecurity. However, we see positive signs in Check Point’s billings growth accelerating faster than revenue growth and the company ramping up its hiring. We view shares as slightly undervalued and expect Check Point to continue being a growth laggard, but steady company for long-term investors.

Check Point Software Technologies is a top player in the cybersecurity market. It generates revenue from selling products, licenses, and subscriptions to protect networks, cloud environments, endpoints, and mobile users. Check Point has morphed from its roots as a firewall pioneer into an enterprisewide security provider.

We are maintaining our $132 fair value estimate for narrow-moat Check Point Software Technologies after its second-quarter results. Matching our expectations, the company produced 4% year-over-year revenue growth, while less aggressive spending led to higher-than-anticipated adjusted earnings of $1.61. The accelerating security subscription growth more than offset the worsening results from products, and we expect this momentum to continue leading the way. Billings growth also hastened, with 9% year-over-year expansion amid a tough comparison of 7% in the prior year’s quarter. While we see positive indications from the results, the tepid outlook matched our expectations. We remain cautiously optimistic that Check Point will ramp its development, sales, and marketing efforts to spur growth more in line with peers and see shares as slightly undervalued.

Check Point Software Technologies is a top player in the cybersecurity market. It generates revenue from selling products, licenses, and subscriptions to protect networks, cloud environments, endpoints, and mobile users. Check Point has morphed from its roots as a firewall pioneer into an enterprisewide security provider.

We are maintaining our $132 fair value estimate for narrow-moat Check Point Software Technologies after the company reported solid first-quarter results. Year-over-year revenue growth of 4% and adjusted earnings of $1.54 were close to our expectations, and our outlook remains stable. Cybersecurity peers may be increasing revenue at multiples higher, but we believe Check Point's sturdy results, stellar operating profile, and opportunity may be overlooked. We view the shares as slightly undervalued and expect Check Point to remain a key vendor in the market through its consolidated approach to network, cloud, and user security.