On Friday, Barclays reiterated its Equal-weight rating on Checkpoint Software (NASDAQ:CHKP), maintaining the price target at $210.00.
The firm outlined three key reasons for a positive outlook in the third quarter. Firstly, Barclays projects 3Q billings to reach $558 million, potentially reaching $575 million, factoring in the usual third-quarter seasonal trends and product cycle benefits. This forecast also considers an $8 million adjustment from acquired deferred revenue in the same quarter the previous year.
Secondly, Barclays anticipates that Checkpoint's billings growth will continue in the mid to high single digits in the fourth quarter due to seasonal strength and a robust pipeline, along with a potential product refresh. The firm also expects Checkpoint to tighten its full-year 2024 guidance by narrowing the range towards the higher end, following the early October acquisition of Cyberint.
Looking further ahead, Barclays predicts a moderate slowdown in billing growth to around 5% year-over-year in FY25, reflecting a new product refresh and an increasing contribution from the Infinity product suite, while also considering more normalized comparisons. Barclays highlighted that the strategic direction set by new CEO Nadav Zafrir will be a significant factor in assessing the impact on Checkpoint's financials in the coming year.
In other recent news, Checkpoint Software has been making headlines with its strong financial performance. The company reported high single-digit growth in billings and mid-single-digit revenue growth, forecasting revenues between $615 million and $650 million for the second half of the year.
Analysts are closely watching for key metrics in the upcoming earnings report, such as billings of $596.7 million, total revenue of $623.5 million, and product revenue of $113.6 million.
Several firms, including BMO Capital Markets, Baird, and Mizuho, have raised their price targets for Checkpoint Software based on its robust performance. Baird has maintained a Neutral rating on the stock, while Wedbush reaffirmed an Outperform rating and raised the price target to $230.
In addition to its earnings, Checkpoint Software announced its plan to acquire Cyberint Technologies Ltd., a move expected to significantly enhance the company's Security Operations Center capabilities by the end of 2024. The company also expanded its share repurchase program by an additional $2 billion.
These are the recent developments for Checkpoint Software.
InvestingPro Insights
Checkpoint Software's recent performance aligns with several InvestingPro Tips and metrics, providing additional context to Barclays' outlook. The company's impressive gross profit margins, as highlighted by InvestingPro, are reflected in the latest data showing a gross profit margin of 88.85% for the last twelve months as of Q2 2024. This robust profitability supports Barclays' positive projections for billings growth.
InvestingPro Tips also indicate that Checkpoint has been aggressively buying back shares and holds more cash than debt on its balance sheet. These factors, combined with the company's strong financial position, may contribute to its ability to pursue strategic initiatives and potentially exceed Barclays' forecasts.
The company's revenue growth of 4.85% over the last twelve months and a more robust 6.57% growth in Q2 2024 lend credence to Barclays' expectations for continued growth in billings. Additionally, with Checkpoint trading near its 52-week high and showing a significant 53.74% price return over the past year, investor confidence appears to be strong, aligning with the positive outlook presented in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Checkpoint Software, providing a deeper understanding of the company's financial health and market position.
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