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On Thursday, Guggenheim reiterated a Neutral rating on Checkpoint Software (NASDAQ:CHKP), ahead of the company’s first-quarter earnings report scheduled for April 23, before the market opens. Analysts at Guggenheim highlighted that they expect Checkpoint Software’s first-quarter revenue and billings to align with the guidance provided, but they foresee limited potential for surpassing consensus estimates. The company has demonstrated steady revenue growth of 6.22% over the last twelve months, with impressive gross profit margins of 88.53%. For the full year 2025, while revenue guidance seems attainable, there is perceived risk to billings.
Checkpoint Software’s CEO Nadav Zafrir, who recently took the helm, has reportedly made a positive impact both within the company and in the broader industry. His leadership is seen as a driving force in steering the company towards growth. According to InvestingPro, the company maintains strong financial health with virtually no debt and aggressive share buyback programs. Analysts note that the company’s financial discipline, particularly in terms of free cash flow (FCF), and its focus on technology are commendable. Yet, there is skepticism about the long-term growth potential, suggesting that Checkpoint Software may continue to grow at a mid-single-digit rate.
The company’s valuation is currently considered high by Guggenheim, trading at approximately 11 times enterprise value to next twelve months’ (EV/NTM) recurring revenue. This valuation reflects the robust growth prospects that have been priced into the stock, particularly following a product cycle that began before what has been referred to as Liberation Day. Current metrics from InvestingPro show the stock trading at an EV/EBITDA multiple of 23.08x and a P/E ratio of 28.19x, suggesting premium pricing. Despite the FCF multiple standing at just over 19 times—or 23 times when including cash paid for share repurchases to offset stock-based compensation (SBC) dilution—analysts see little or no room for improvement in FCF margin.
Guggenheim’s stance remains neutral due to these factors, coupled with the belief that most of the stock’s upside was realized following the anticipation of the product cycle, which could last a few more quarters. The analysts have expressed their concerns about missing out on the majority of the stock’s gains, which began when the stock was valued at nearly half its current price. InvestingPro analysis indicates the stock is currently overvalued, with 10+ additional exclusive ProTips and a comprehensive Pro Research Report available for deeper insights into CHKP’s valuation and growth prospects.
In other recent news, Checkpoint Software is preparing to announce its first-quarter earnings, with market expectations set at approximately $636 million in revenue, marking a 6% year-over-year increase, and an operating margin of 41%. UBS analyst Roger Boyd has maintained a Neutral stance on the company, citing a positive outlook on fundamentals but cautioning about high expectations. Meanwhile, TD Cowen analyst Shaul Eyal raised the price target to $285, maintaining a Buy rating, due to Checkpoint’s defensive attributes and strong free cash flow. Stephens initiated coverage with an Equal Weight rating and a $255 target, highlighting the company’s leadership transition and potential growth drivers like Secure Access Service Edge (SASE).
BMO Capital Markets upgraded Checkpoint Software to Outperform, raising the price target to $275, reflecting confidence in the company’s strategic investments and leadership changes. BofA Securities also upgraded the stock to Buy, increasing the price target to $260, attributing optimism to the new CEO’s potential to revitalize the company’s performance. These recent developments indicate a mix of cautious optimism and strategic confidence among analysts regarding Checkpoint Software’s future.
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