Investing.com -- Goldman Sachs analysts have revised ratings on US security stocks, double-upgrading Cloudflare (NYSE:NET) to Buy from Sell while downgrading Check Point Software (NASDAQ:CHKP) to Neutral from Buy.
Cloudflare’s upgrade is underpinned by improving sales and marketing productivity, which Goldman believes will lead to stronger fundamentals in 2025.
"We see two catalysts for the stock in 2025: a) an improving sales and marketing productivity cycle after two years of evolution to better address platform sales in the enterprise, and b) traction with Act III products for developer services," the note states.
The Wall Street firm highlights that Cloudflare’s unique edge network architecture positions it well for AI inferencing workloads, a growing market. In addition to the upgrade, Goldman also raised its 12-month price target for NET to $140 from $77, implying a 28% upside.
Cloudflare shares jumped more than 5% in premarket trading Thursday.
In contrast, Check Point’s downgrade reflects concerns over earnings growth for 2025, despite the company’s ongoing investments.
“We view 2025 as a year of incremental investment for Check Point, as its new CEO assesses priorities for growth and the company ramps its new SASE products,” Goldman notes.
While the firm acknowledges the potential for longer-term upside, it expects EPS growth to be under pressure, limiting stock performance in the near term.
“We see an opportunity to become more positive into 2026, as the path to 10%+ revenue growth and 20%+ EPS growth comes back into focus if Check Point successfully converts incremental investments into incremental revenue growth,” analysts added.
Goldman’s new price target for CHKP is $207, indicating an 11% upside.
The shift in ratings aligns with Goldman’s broader view that security stocks are increasingly driven by platform strategies.
The note highlights that companies perceived as platforms—like Cloudflare—outperformed in 2024, while point-product vendors faced challenges. This trend is expected to continue as CIOs prioritize platform consolidation to manage costs amid rising interest rates.