On Tuesday, Barclays updated its outlook for Checkpoint Software (NASDAQ:CHKP), citing lower-than-expected performance in the third quarter. The company’s analyst has lowered the price target to $200.00 from the previous $210.00, while maintaining an Overweight rating on the company’s stock.
Checkpoint Software reported billings that were below expectations in the third quarter, which was attributed to the delay of several deals in the EMEA region now expected to close in the fourth quarter. The analyst expects that these deferred transactions could contribute an additional three percentage points to the company’s growth in the fourth quarter. Moreover, the acquisition of Cyberint is expected to add another point to the growth.
Looking ahead, Barclays forecasts high single digit (HSD) growth for Checkpoint Software in the fourth quarter due to the inclusion of the deferred deals. As fiscal year 2025 approaches, expectations are set at around 5% growth, recognizing that the equation will become more challenging.
The analyst suggests that a potential acceleration in Checkpoint Software’s growth story should likely come from its Infinity product offering. Infinity represents an important aspect of the company’s strategy to drive future growth and market performance.
In other recent news, Check Point Software Technologies Ltd. reported. third quarter financial results in line with analyst expectations, with revenue up 7% year-on-year. The cybersecurity company reported adjusted earnings per share of $2.25 and revenue of $635 million, slightly above the expected forecast of $634.98 million. This represents an increase of 7% compared to the same quarter last year.
Check Point also experienced double-digit growth in its Infinity Platform, Harmony Email and Infinity Global Services. Additionally, the company’s security subscription revenue grew 12% year over year to $277 million, while product and licensing revenue rose 4% to $119 million.
In terms of operating income, the company’s non-GAAP operating income was $274 million, representing 43% of revenues. During the quarter, Check Point acquired Cyberint Ltd. about, a provider of third-party risk management solutions, for $186 million in net cash and repurchased approximately 1.79 million shares for a total consideration of $325 million. The company ended the quarter with $2.87 billion in cash and marketable securities.
InvestingPro Insights
To complement Barclays’ analysis on Checkpoint Software (NASDAQ:CHKP), recent data from InvestingPro provides additional context. Despite the lowered price target, CHKP’s financial metrics remain robust. The company boasts an impressive gross profit margin of 88.85% for the trailing twelve months through Q2 2024, underscoring its operational efficiency. This ties in with one of the InvestingPro Tips, which highlights CHKP’s “impressive gross profit margins.”
Moreover, CHKP’s revenue growth of 6.57% in Q2 2024 suggests that the company is maintaining its growth trajectory, albeit at a moderate pace. This could support Barclays’ projection of high single-digit growth in the fourth quarter, especially given the expected closing of deferred deals.
It’s worth noting that CHKP’s price-to-earnings ratio stands at 24.19, which can be considered high relative to its near-term earnings growth, as noted in another InvestingPro Tip. This valuation metric could be influenced by investor expectations surrounding the company’s Infinity product and its potential to accelerate growth.
For investors looking for a more in-depth analysis, InvestingPro offers 13 additional tips on CHKP, which allow a deeper dive into the company’s financial health and market position.
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