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On Wednesday, Raymond (NSE:RYMD) James affirmed its Outperform rating on Checkpoint Software (NASDAQ:CHKP), with a steady price target of $240.00. The endorsement follows Checkpoint’s first-quarter results, which showed strong growth trends and offered forward guidance indicating stability despite a challenging macroeconomic landscape. The company’s impressive 88.5% gross profit margin and robust financial health score from InvestingPro support this positive outlook.
Analysts at Raymond James highlighted that Checkpoint’s initial second-quarter revenue guidance modestly exceeds the previous year’s quarter-over-quarter growth assumptions. With revenue growth of 6.2% over the last twelve months and analysts forecasting continued profitability, this outlook suggests that concerns over demand being artificially boosted in anticipation of hardware inflation due to tariffs may not be warranted. The firm also observed that investor sentiment towards Checkpoint has significantly improved after a series of analyst upgrades earlier in the year, reflected in the stock’s 32% return over the past year. According to InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels.
Checkpoint’s strategy appears unaffected by potential tariff impacts, with the company not signaling any imminent pricing changes, which could have encouraged customers to accelerate purchases. Furthermore, the impact of tariffs on Checkpoint’s margins has been minimal, and there is no pressing need to adjust pricing substantially. The company’s strong return on invested capital of 27% and healthy cash flows demonstrate its operational efficiency.
Checkpoint, as a non-U.S. domiciled cybersecurity company, is also reported to be increasing its international market share. Raymond James notes a positive shift in company culture under new leadership, with the recent announcement of a new Chief Technology Officer and the formation of new internal organizations.
The firm also points to Checkpoint’s nearly $3 billion "war chest," which could be utilized to enhance growth in targeted areas. Additional insights are expected to be gleaned from the upcoming RSA conference, which Checkpoint will attend next week.
In other recent news, Check Point Software Technologies Ltd. reported first-quarter earnings and revenue that surpassed analyst expectations. The company posted adjusted earnings per share of $2.21, exceeding the consensus estimate of $2.19. Revenue rose by 7% year-over-year to $638 million, surpassing the expected $636.22 million. Product and license revenue saw a 14% increase, reaching $114.1 million, driven by strong demand for the Quantum Force appliances. Additionally, security subscription revenue increased by 10% to $290.6 million. Check Point’s cash flow from operations rose 17% year-over-year to $421 million. Calculated billings grew by 7% to $553 million, and remaining performance obligations increased by 11% to $2.4 billion. CEO Nadav Zafrir noted that the first-quarter results provide a solid foundation for the company’s future growth.
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