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On Monday, Stephens, a research firm, initiated coverage on Checkpoint Software (NASDAQ:CHKP) shares with an Equal Weight rating and set a price target of $255. Currently trading at $227.97 with a market capitalization of $24.69 billion, InvestingPro analysis indicates the stock is trading above its Fair Value. The firm’s analysis points to Checkpoint entering a significant leadership transition, which is expected to bring about a better balance between sales, marketing, and product technology.
The new CEO’s approach is seen as a positive influence, with the potential to accelerate Checkpoint’s revenue growth beyond its current 6.22% rate. With an impressive gross profit margin of 88.53%, Stephens highlights several growth drivers for the company, including new product areas like Secure Access Service Edge (SASE), Email Security ( Harmony (JO:HARJ)), Cloud Security (CloudGuard), and Enterprise Risk Management (ERM). Moreover, the firm anticipates Checkpoint could gain from a refresh cycle in its core network security appliance business, Quantum.
Stephens notes that Checkpoint has increased its investment in sales and marketing in recent years, leading to a moderate compression in margins. However, given Checkpoint’s historical emphasis on profitability, no significant changes are expected in this area, and stability is anticipated.
The research firm also acknowledges Checkpoint’s strong balance sheet, which should enable continued use of mergers and acquisitions to expand growth opportunities. While the analysts at Stephens are positive about Checkpoint’s fundamental story, they consider the current risk/reward for the stock to be neutral, especially given its strong year-to-date performance. This performance is attributed to the improved market sentiment regarding the growth outlook for network security and optimism about the new leadership’s potential to return the company to double-digit revenue growth. Despite the positive fundamental outlook, Stephens suggests that investors might want to wait for a more attractive entry point into the stock.
In other recent news, Checkpoint Software Technologies has seen a series of analyst upgrades and strategic developments. BMO Capital Markets upgraded Checkpoint’s stock rating to Outperform with a new price target of $275, citing strategic investments and leadership changes as key factors for the company’s potential growth. BofA Securities also elevated the stock from Neutral to Buy, setting a price target of $260, attributing this to the new CEO Nadav Zafrir’s efforts to revitalize the company’s performance. Piper Sandler followed suit, upgrading Checkpoint to Overweight and matching the price target of $260, reflecting optimism about the company’s future prospects under the new leadership.
Additionally, Checkpoint has entered a partnership with Variscite to enhance IoT security, integrating Check Point Quantum IoT Protect with Variscite’s System on Modules. This collaboration aims to provide robust security against cyber threats, aligning with the EU’s Cyber Resilience Act. Meanwhile, Stifel maintained a Hold rating with a $220 price target, noting strategic priorities discussed at Check Point’s annual user conference, including advancements in hybrid mesh architecture and GenAI/Agentic AI.
These recent developments highlight a period of strategic shifts and analyst optimism for Checkpoint Software Technologies, suggesting potential for growth and enhanced investor interest.
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