Check Point’s SWOT analysis: cybersecurity stock navigates refresh cycles amid market shifts

Check Point Software Technologies Ltd. (NASDAQ:CHKP) continues to navigate the evolving cybersecurity landscape with a mix of established products and emerging solutions. The company has demonstrated resilience in recent quarters while working to shed its legacy vendor image and position itself for future growth. As the cybersecurity market becomes increasingly competitive, Check Point’s strategy focuses on product refreshes, platform integration, and expansion into high-growth segments like Secure Access Service Edge (SASE).

Recent performance highlights strong billings growth

Check Point has shown impressive billings growth in recent quarters, with a notable 16% year-over-year increase in the third quarter of 2025. This performance exceeded some analysts’ expectations and has been attributed to improved execution, pricing power, and growing traction in emerging solutions. The company’s Quantum appliances have been a particular bright spot, with strong demand driving product revenue.

Despite this strong showing, analysts maintain varying degrees of optimism about the sustainability of this growth rate. Some project a more conservative outlook, modeling 6% growth for Q4 2025 and 8% for the full year of 2026. This cautious stance reflects broader market uncertainties and the cyclical nature of hardware refresh cycles.

The first quarter of 2025 demonstrated Check Point’s ability to deliver solid results despite macroeconomic uncertainties. Management reported they had not observed significant changes in customer behavior, such as delayed or canceled projects, due to tariff or macro concerns. Nevertheless, the company incorporated a conservative approach in its Q2 guidance, which came in below consensus expectations, to account for potential project delays.

Strategic evolution under new leadership

Since Nadav Zafrir took over as CEO in December 2024, Check Point has been refining its strategic direction. The company is focusing on long-term growth through increased adoption of its security solutions, expansion of its SASE offerings, and disciplined merger and acquisition activities.

One notable development is the acquisition of Lakera, expected to close in the fourth quarter of 2025. This acquisition aims to strengthen Check Point’s GenAI security portfolio and enhance its SecOps capabilities. Such strategic moves demonstrate the company’s commitment to evolving beyond its traditional firewall business.

Check Point’s platform strategy continues to evolve, with particular emphasis on SASE investments and partnerships to offer greater security flexibility. While SASE sales are rising in enterprise accounts, analysts note that the company is still several quarters away from having a fully competitive offering with feature parity to market leaders.

The company has also created a new Workforce division as part of its initiatives aimed at returning to double-digit growth. This organizational change, coupled with increased marketing efforts, signals management’s determination to accelerate growth and strengthen market position.

Product refresh cycle drives near-term growth

A significant factor in Check Point’s recent performance has been the ongoing product refresh cycle, which analysts expect to continue through at least the first half of 2026. This extended cycle is attributed to various factors including end-of-life timelines and previous supply chain disruptions.

The company has a strong pipeline for its Quantum Force appliances, with forecasts suggesting approximately 9% product revenue growth in fiscal year 2025. This hardware-driven growth provides a solid foundation while Check Point works to build momentum in its subscription and cloud-based offerings.

Analysts note that while the refresh cycle provides near-term stability, the company faces structural pressure on hardware demand due to soft demand for traditional firewalls. This dynamic underscores the importance of Check Point’s efforts to diversify its revenue streams and expand into high-growth areas like cloud security and SASE.

Financial outlook and guidance

For the second quarter of fiscal year 2025, Check Point provided guidance of $642-682 million in revenue, compared to analyst consensus of $665.6 million. The company projected non-GAAP earnings per share of $2.32-2.42 for the same period.

Full-year fiscal 2025 guidance remained unchanged at $2.660-2.760 billion in revenue and non-GAAP EPS of $9.60-10.20, against consensus estimates of $2.72 billion and $9.90, respectively. The maintenance of full-year guidance despite a conservative Q2 outlook suggests management’s confidence in stronger performance during the second half of the year.

Looking further ahead, analysts estimate earnings per share for fiscal year 2026 to be approximately $9.95-10.42, indicating modest growth expectations. The company’s market capitalization stood at approximately $21.85 billion as of late October 2025.

Competitive positioning and market challenges

Check Point operates in a highly competitive network security market, facing rivals such as Cisco, Fortinet (FTNT), and Palo Alto Networks (PANW). The company’s perception as a legacy vendor presents challenges in competitive positioning, particularly as it works to establish itself in emerging segments like SASE.

While Check Point benefits from stable firewall demand alongside its competitors, the company must overcome the perception gap to drive accelerated growth. Its integrated platform strategy, particularly in cloud security posture management, has shown double-digit growth, providing a path forward beyond traditional firewall products.

The company’s geographic diversification offers some defensive characteristics in uncertain markets. Analysts note that Check Point remains a defensive stock due to its geographic spread, stable IT spending, and limited exposure to new business risks.

Bear Case

Can Check Point overcome its perception as a legacy vendor in the cybersecurity market?

Check Point faces significant challenges in reshaping market perception as it transitions from a traditional firewall vendor to a comprehensive security platform provider. This perception issue creates headwinds in competitive situations, particularly when targeting new customers or expanding beyond its installed base. Despite efforts to modernize its portfolio, the company continues to be viewed primarily through the lens of its legacy firewall business.

The SASE market illustrates this challenge clearly. While Check Point is investing heavily in this high-growth area, it remains several quarters away from achieving feature parity with market leaders. This gap allows more nimble competitors to capture market share while Check Point works to complete its offering. The company’s traditional enterprise sales approach may also be less effective in rapidly evolving segments where speed to market and innovation are paramount.

Will Check Point’s conservative growth projections impact investor confidence?

The company’s cautious outlook, particularly its conservative Q2 2025 guidance and modest growth projections for FY26, raises questions about long-term growth potential. While management frames this conservatism as prudent planning for macroeconomic uncertainties, it may signal underlying challenges in accelerating growth beyond mid-single digits.

Analysts model 6% growth for Q4 2025 and 8% for the full year of 2026, significantly below the 16% billings growth seen in Q3 2025. This expected deceleration suggests the recent strong performance may be temporary, driven primarily by the product refresh cycle rather than sustainable business momentum. As this refresh cycle eventually winds down, Check Point may struggle to maintain growth rates that satisfy growth-oriented investors.

The deceleration in Security Subscription revenue growth year-over-year further compounds these concerns, as subscription services represent a critical component of the company’s future growth strategy. If Check Point cannot accelerate this segment while hardware refreshes are still providing tailwinds, it may face greater challenges once the refresh cycle concludes.

Bull Case

How might Check Point’s product refresh cycle drive sustained growth through 2026?

Check Point’s ongoing product refresh cycle provides a solid foundation for growth that extends well beyond near-term quarters. Analysts expect this cycle to continue through at least the end of 2026, driven by several factors including end-of-life timelines for older products and the aftermath of supply chain disruptions that delayed normal replacement patterns.

This extended refresh window gives Check Point valuable time to execute its strategic transformation while maintaining revenue momentum. The strong demand for Quantum appliances demonstrates that customers continue to value Check Point’s core security capabilities, providing stable cash flow to fund investments in emerging areas. With a 9% projected growth in product revenue for FY25, the company has a predictable revenue stream that reduces execution risk.

Moreover, these hardware refreshes create natural opportunities for Check Point to introduce customers to its broader platform capabilities, including cloud security and SASE offerings. Each device replacement represents a potential upsell opportunity, allowing the company to gradually shift its revenue mix toward higher-growth subscription services while maintaining relationships with its loyal customer base.

What impact could the new CEO’s strategy have on Check Point’s long-term positioning?

Since taking the helm in December 2024, CEO Nadav Zafrir has implemented strategic changes that position Check Point for accelerated growth. The creation of a new Workforce division, increased marketing investments, and sharper focus on SASE demonstrate a more aggressive approach to market expansion than seen under previous leadership.

Zafrir’s background brings fresh perspective to Check Point’s strategy, particularly in addressing the perception challenges that have limited the company’s growth. The positive reception from analysts after investor meetings with the CEO indicates growing confidence in the new direction. While these strategic shifts will take time to materialize in financial results, they address fundamental issues that have constrained Check Point’s growth potential.

The Lakera acquisition, expected to close in Q4 2025, exemplifies this strategic evolution by strengthening Check Point’s position in the rapidly growing GenAI security market. This disciplined M&A approach allows Check Point to accelerate its entry into emerging security segments while maintaining its financial discipline. As these investments mature and the company continues to execute on its platform strategy, Check Point has the potential to return to double-digit growth rates that would significantly change investor perception.

SWOT Analysis

Strengths

• Strong billings growth (16% year-over-year in Q3 2025)
• Solid execution in product refresh cycle
• Strong pipeline for Quantum appliances
• Geographic diversification providing stability in uncertain markets
• Disciplined financial management
• Defensive stock characteristics with stable IT spending

Weaknesses

• Below-consensus performance in Security Subscriptions
• Conservative guidance suggesting caution about future growth
• Perception challenges as a legacy vendor
• Not yet at feature parity in SASE offerings
• Deceleration in Security Subscription revenue growth

Opportunities

• SASE market expansion potential
• GenAI security portfolio enhancement through Lakera acquisition
• Growing enterprise account penetration
• Cloud security posture management growth
• New leadership driving strategic evolution
• Extended product refresh cycle through 2026

Threats

• Intense competition from Cisco, Fortinet , and Palo Alto Networks
• Soft demand for traditional firewalls indicating structural pressure
• Macroeconomic uncertainties potentially impacting IT spending
• Tariff impacts (though limited to less than 0.5% on gross margins)
• Accelerating shift to cloud potentially reducing on-premises security needs

Analysts Targets

• Barclays Capital Inc. - October 29, 2025 - Equal Weight - $235.00
• Cantor Fitzgerald - October 22, 2025 - Neutral - $220.00
• Piper Sandler - May 13, 2025 - Overweight - $260.00
• Barclays Capital Inc. - May 7, 2025 - Equal Weight - $230.00
• RBC Capital Markets - April 24, 2025 - Sector Perform - $224.00
• Cantor Fitzgerald - April 24, 2025 - Neutral - $220.00
• Barclays Capital Inc. - April 24, 2025 - Equal Weight - $230.00
• Barclays Capital Inc. - April 21, 2025 - Equal Weight - $230.00

This analysis is based on information available from April 21, 2025, through October 29, 2025.

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