On Tuesday, Barclays made adjustments to its outlook on Checkpoint Software (NASDAQ:CHKP), citing a lower than expected performance in the third quarter. The firm's analyst has revised the price target down to $200.00 from the previous $210.00, while maintaining an Overweight rating on the company's shares.
Checkpoint Software reported billings that fell short of expectations in the third quarter, attributed to the delay of several deals in the EMEA region which are now expected to close in the fourth quarter. The analyst anticipates that these postponed transactions could contribute an additional three percentage points to the company's growth in the fourth quarter. Furthermore, the acquisition of Cyberint is projected to add another point to growth.
Looking ahead, Barclays forecasts a high single-digit (HSD) growth rate for Checkpoint Software in the fourth quarter due to the inclusion of the delayed deals. As the financial year 2025 approaches, the expectations are set for approximately 5% growth, acknowledging that the comparison will become more challenging.
The analyst suggests that any potential acceleration in Checkpoint Software's growth story would likely need to stem from its Infinity product offering. Infinity represents a key aspect of the company's strategy to drive future growth and market performance.
In other recent news, Check Point Software Technologies (NASDAQ:CHKP) Ltd. reported third-quarter financial results that align with analyst expectations, with revenue demonstrating a 7% increase year-over-year. The cybersecurity company reported adjusted earnings per share of $2.25 and a revenue of $635 million, which is slightly above the projected forecast of $634.98 million. This represents a 7% increase compared to the same quarter last year.
Check Point also experienced double-digit growth in its Infinity Platform, Harmony Email, and Infinity Global Services. Moreover, the company's security subscription revenues grew 12% year-over-year to $277 million, while its product and license revenue increased by 4% to $119 million.
In terms of operational income, the company's non-GAAP operating income was $274 million, equating to 43% of revenues. During the quarter, Check Point acquired Cyberint Ltd., a provider of external risk management solutions, for $186 million in net cash and repurchased approximately 1.79 million shares at a total cost of $325 million. The company concluded the quarter with $2.87 billion in cash and marketable securities.
InvestingPro Insights
To complement Barclays' analysis of Checkpoint Software (NASDAQ:CHKP), recent data from InvestingPro offers additional context. Despite the lowered price target, CHKP's financial metrics remain robust. The company boasts an impressive gross profit margin of 88.85% for the last twelve months as of Q2 2024, underscoring its operational efficiency. This aligns with one of the InvestingPro Tips, which highlights CHKP's "impressive gross profit margins."
Moreover, CHKP's revenue growth of 6.57% in Q2 2024 suggests that the company is maintaining its growth trajectory, albeit at a moderate pace. This could support Barclays' projection of high single-digit growth in the fourth quarter, especially considering the anticipated closure of delayed deals.
It's worth noting that CHKP's P/E ratio stands at 24.19, which may be considered high relative to its near-term earnings growth, as pointed out by another InvestingPro Tip. This valuation metric could be influenced by investor expectations surrounding the company's Infinity product and its potential to accelerate growth.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips on CHKP, providing a deeper dive into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.