Stock Analysis
Value
US

Check Point Software Technologies (CHKP:US)

25 Nov 2020
By
Check Point Software Technologies (CHKP) develops, markets and supports a range of software and hardware products and services for information technology security, network and gateway, data and endpoint security solutions.
Key Statistics
52-Week RangeAvg. Daily Vol (3 Mo)Market ValueDividend YieldFloat %
Target PriceConsensus Rating
(5 strong buy – 1 strong sell)
Next Earnings Announcement
80.06 – 130.98985,25516,679.60-%78.4%128.883.1403/02/2021

 

CHPK sets up a perimeter around networks, providing security software and appliances for corporate networks and service providers. Its products verify remote users, control access, block viruses, setup virtual private networks (VPNs) for secure communications, bandwidth management and network performance. As a service Check Point also offer clients consulting, integration, maintenance and training.

While CHKP has made inroads with cloud expansion, it’s low growth levels relative to the network-security market. While the company may benefit from VPN security due to work and study from home, although with shifts to cloud its traditional appliance and maintenance product sales may be at risk of decline. CHPK remains in a lengthy transition to a subscription-based revenue model as it seeks to stall declining sales in product and maintenance. Moving to its existing large legacy enterprise customer based to subscription-based products and services is key to driving revenue growth and should help close the gap with peers Fortinet and Palo Alto Networks.

For the year ending December 2020 revenue is forecast to rise modestly by +0.6% to US$2,056.85m and a further +2.8% gain in 2021 to US$2,115.19m. Earnings per share is estimated to rise +24.1% to US$6.74 in 2020 before tapering to increase +2.5% in 2021 to US$6.91. Based on these figures the stock trades on forward P/E multiples of 17.5 and 17.0 for 2020 and 2021 respectively, a 40% and 47% discount to the peer group average of 28.9 and 32.3.

The average target price of analysts covering the stock is $128.88 with 17% of analysts rating the stock as a buy, compared to 11% as a sell and 72% as a hold.

 

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