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On Wednesday, UBS analyst Roger Boyd reaffirmed a Neutral stance on Checkpoint Software (NASDAQ:CHKP), maintaining the price target at $230.00. The stock, currently trading at $223.15, sits near its 52-week high of $234.35, with InvestingPro data showing an impressive financial health score of "GREAT." Boyd’s assessment followed a review of the company’s prospects in the lead-up to its first-quarter earnings report, scheduled for April 23. He acknowledged a generally positive outlook on the company’s fundamentals after the CPX conference, noting that industry checks mostly indicated an upbeat sentiment. Supporting this view, InvestingPro data reveals the company maintains impressive gross profit margins of 88.53% and has achieved 6.22% revenue growth over the last twelve months. However, Boyd expressed caution due to the high expectations set for the first quarter in a market riddled with uncertainty.
Checkpoint Software’s success with its Secure Access Service Edge (SASE) is deemed crucial for exceeding growth expectations. Boyd mentioned that there has been no significant reported progress in this area, which may affect the company’s performance. As the market anticipates first-quarter revenues of approximately $636 million, marking a 6% year-over-year increase, and an operating margin of 41%, down 140 basis points from the previous year, Boyd considers these projections to be reasonable.
The consensus on billings for the first quarter stands at $550 million, reflecting a 6% growth. Boyd finds this estimate to be plausible on a quarter-over-quarter basis. However, with Checkpoint Software’s stock trading close to 20 times its CY26E enterprise value to free cash flow, investors are likely to expect results that surpass the current market projections for the first quarter.
Boyd concluded by addressing the company’s guidance for full-year revenue, which typically encompasses a broad range. He suggested that Checkpoint Software might manage to meet expectations by simply reiterating its previous guidance, as there appears to be no anticipation of a guidance cut priced into the stock at this time. With the stock trading at a P/E ratio of 29.09, investors seeking deeper insights into Checkpoint Software’s valuation and growth prospects can access comprehensive analysis through InvestingPro, which offers exclusive access to 13+ additional ProTips and detailed financial metrics.
In other recent news, Checkpoint Software has seen several updates from analysts regarding its stock ratings and price targets. TD Cowen has raised the price target for Checkpoint Software to $285, maintaining a Buy rating, citing the company’s strong free cash flow and steady performance as key factors. BMO Capital Markets upgraded Checkpoint’s stock from Market Perform to Outperform, increasing the price target to $275, reflecting confidence in the company’s potential for sustained growth due to strategic investments and leadership changes. BofA Securities also upgraded the stock to Buy, raising the price target to $260, highlighting the new CEO’s potential to revitalize the company’s performance. Similarly, Piper Sandler increased their rating to Overweight, with a new price target of $260, following positive impressions from the CPX user conference and discussions with management. Stephens initiated coverage with an Equal Weight rating and a $255 price target, noting a leadership transition that could balance sales, marketing, and technology. These recent developments indicate a growing optimism among analysts about Checkpoint Software’s future performance and growth potential in the cybersecurity sector.
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