CHKP: Billings Strength Will Support AI Security Platform Expansion

Analysts have nudged their fair value estimate for Check Point Software Technologies slightly lower to about $226 per share, reflecting modest tweaks to revenue growth, profit margin and future P/E assumptions following Street research that highlighted strong 20% billings growth, along with some caution on the durability of that momentum.

Analyst Commentary

Street research following the latest quarter points to a generally constructive but balanced view on Check Point Software Technologies, with higher price targets reflecting stronger billings and mixed views on how durable that trend might be.

Bullish Takeaways

Bullish analysts highlight Q3 billings growth of 20% year over year, which they say was well above expectations and indicates renewed momentum in the business, an important input to their higher valuation ranges.
Several firms describe the quarter as solid, with beats across most major metrics relative to their models, which supports their willingness to lift price targets despite only modest adjustments to longer term assumptions.
Some bullish analysts argue that the shares remain attractive even after recent strength, pointing to the combination of billings performance and what they view as still reasonable valuation multiples.
There is support among these analysts for the idea that Check Point can pair mid to high single digit top line growth with what they describe as industry leading margins, which they see as a key underpinning for the stock’s P/E framework.

Bearish Takeaways

More cautious analysts focus on the quality of billings growth, citing push outs and pull ins across Q2 to Q4, which adds some uncertainty around how clean the 20% billings figure is as a run rate indicator.
On profitability, research notes flag a one time tax benefit and foreign exchange related headwinds, which make underlying margin trends harder to interpret and introduce some noise into earnings based valuation work.
Some bearish analysts acknowledge signs of revitalized growth but say the pace and sustainability of that change remain unclear, so they prefer to keep more neutral ratings even as they move price targets higher.
There is also caution around potential margin pressure looking out to 2026, which could limit upside to earnings relative to current expectations and temper how much investors might be willing to pay in terms of P/E.

What's in the News

RBC Capital raised its price target on Check Point shares to $215 from $207 after what it described as good results relative to expectations, with 20% billings growth and beats across most major metrics. It also flagged mixed factors around billings timing and a one time tax benefit alongside FX headwinds (Periodicals).
Check Point launched its Quantum Firewall Software R82.10, adding 20 capabilities aimed at safe AI adoption, hybrid mesh network security, prevention focused threat protection, and a more unified security platform, with over 250 integrations and ties into its broader AI security stack including the Lakera acquisition (Key Developments).
The company introduced AI Cloud Protect with NVIDIA, an integrated security offering for AI factories that uses NVIDIA BlueField DPUs to provide network, host, and application layer protection for AI model development and inference workloads while aiming to avoid performance trade offs (Key Developments).
Check Point and partners including Lakera and the UK AI Security Institute released the open source Backbone Breaker benchmark to test large language model security within AI agents, using more than 19,000 adversarial attacks collected from the Gandalf: Agent Breaker red teaming game (Key Developments).
Management indicated it is actively assessing acquisition targets to reinforce its AI security offerings, alongside ongoing internal R&D investment, while stating that nothing is imminent at this stage (Key Developments).

Valuation Changes

Fair Value Estimate edged slightly lower from about $228.40 per share to about $226.51 per share.
Discount Rate adjusted marginally from 10.63% to 10.61%.
Revenue Growth was fine tuned at 6.10%, reflecting a very small change in the long term growth input.
Net Profit Margin was nudged slightly higher at 30.93%.
Future P/E was trimmed modestly from 32.43x to 32.14x.

Quantum Force appliances and the Infinity platform drive strong revenue growth, with potential for sustained growth through customer retention and cross-selling.
Strategic AI integration and expansion initiatives are set to enhance user experiences and drive innovation-led revenue growth.
Competitive pressures and reliance on Taiwan could strain margins, while strategic shifts may disrupt execution amidst macroeconomic uncertainty and tariff implications.

Catalysts

About Check Point Software Technologies

Develops, markets, and supports a range of products and services for IT security worldwide.What are the underlying business or industry changes driving this perspective?

Check Point's Quantum Force appliances have driven strong demand, resulting in significant product and license revenue growth. This trend, expected to continue with a robust pipeline, indicates potential for sustained revenue and earnings growth.
The Infinity platform continues to gain traction, with strong double-digit revenue growth and increased customer adoption, now accounting for over 15% of total revenue. This supports expectations for revenue growth through enhanced customer retention and cross-selling opportunities.
Strategic focus on SASE and AI integration, such as embedding Check Point security engines that use AI for enhanced user experience and security, suggests future revenue growth as enterprises seek comprehensive solutions for modern hybrid workforces.
Expansion initiatives, like the new R&D center in India, aim to improve user and cyber practitioner experiences, potentially impacting revenue and net margins through innovation-driven revenue streams and cost management.
The continued investment in partnerships and key talent, such as the integration of Gil Friedrich's division and appointing Yonatan Zanger as CTO, positions Check Point to capitalize on AI and hybrid workforce security trends, potentially driving revenue and EPS growth.

Check Point Software Technologies Earnings and Revenue Growth

Check Point Software Technologies Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Check Point Software Technologies's revenue will grow by 5.9% annually over the next 3 years.
Analysts assume that profit margins will shrink from 32.5% today to 31.5% in 3 years time.
Analysts expect earnings to reach $989.0 million (and earnings per share of $10.1) by about September 2028, up from $858.1 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $865.3 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 29.6x on those 2028 earnings, up from 24.6x today. This future PE is lower than the current PE for the US Software industry at 36.2x.
Analysts expect the number of shares outstanding to decline by 3.08% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 10.63%, as per the Simply Wall St company report.

Check Point Software Technologies Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The macroeconomic environment presents challenges such as potential volatility and uncertainty, which could lead to deals being delayed or slipping into subsequent quarters, impacting near-term revenue projections.
The company faces a competitive landscape in emerging technologies like SASE and AI, potentially leading to increased spending on research and development and marketing, which could strain net margins.
The company is dealing with the implications of international tariffs and manufacturing risks, particularly with their reliance on Taiwan for production, which could affect cost of goods sold and gross margins.
The focus on refresh cycles in the firewall market, while currently driving growth, may not sustain long-term revenue increases if the overall market does not grow substantially as customers eventually sweat assets.
The transition regarding their CNAPP strategy and reliance on partnerships, such as with Wiz, suggests a shift in priority that could temporarily disrupt execution and revenue from this segment.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $223.054 for Check Point Software Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $285.0, and the most bearish reporting a price target of just $173.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.1 billion, earnings will come to $989.0 million, and it would be trading on a PE ratio of 29.6x, assuming you use a discount rate of 10.6%.
Given the current share price of $196.56, the analyst price target of $223.05 is 11.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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