Last Update 25 Dec 25

CHKP: Sustained 20% Billings Momentum Will Drive AI Security Upside

Analysts have modestly raised their price targets on Check Point Software Technologies into the low to mid $200s, citing stronger than expected Q3 billings growth around 20 percent and confidence in sustained mid to high single digit revenue expansion, along with resilient margins.

Analyst Commentary

Analysts acknowledge that the strong Q3 showing, particularly the roughly 20 percent billings growth versus expectations near high single digits, supports the recent upward revisions in price targets into the low to mid 200 dollar range.

Bullish Takeaways

Bullish analysts highlight Q3 billings growth of 20 percent as clear evidence of revitalized demand momentum, which they see as supportive of a higher valuation multiple.
Several note that the company outperformed across most major financial metrics, reinforcing confidence in execution and the durability of mid to high single digit revenue growth.
Despite some one time tax benefits and FX headwinds, margins are viewed as resilient and near industry leading levels, underpinning the case for further upside in earnings power.
With billings growth substantially beating prior consensus and shares still viewed as attractive, bullish analysts argue the risk reward skews favorably at current price levels.

Bearish Takeaways

More cautious analysts point to billings timing effects, including push outs and pull ins across quarters, as a source of noise that complicates assessing the true underlying growth trajectory.
There is skepticism about how sustainable the recent acceleration will be, with some viewing the pace of improvement as still unproven and warranting valuation discipline.
Concerns about potential margin pressure into 2026 temper enthusiasm, as any erosion from current high margin levels could cap upside to earnings estimates and target prices.
Given lingering questions around the longevity of growth and profitability at current levels, some analysts maintain more neutral ratings even as they lift price targets to reflect better near term execution.

What's in the News

RBC Capital raised its price target on Check Point shares to 215 dollars from 207 dollars after Q3 results beat expectations across most major metrics, including 20 percent billings growth (RBC Capital research note)
Launched Check Point Quantum Firewall Software R82.10 with 20 new capabilities to secure AI adoption, strengthen hybrid mesh network security, and unify threat prevention across more than 250 third party integrations (company product announcement)
Expanded collaboration with Microsoft to secure Microsoft Copilot Studio using Check Point AI Guardrails, data loss prevention, and threat prevention for safer, large scale generative AI agent deployments (company client announcement)
Introduced AI Cloud Protect with NVIDIA to secure AI factories and model development on NVIDIA BlueField powered infrastructure, delivering full stack security with negligible performance impact (company product announcement)
Announced plans to pursue additional AI focused acquisitions to complement organic R&D and extend leadership across the full AI security stack (executive M&A commentary)

Valuation Changes

Fair Value Estimate unchanged at approximately 228.40 dollars per share, indicating no material shift in long term intrinsic value assumptions.
Discount Rate edged down slightly from about 10.67 percent to 10.63 percent, reflecting a modestly lower perceived risk profile.
Revenue Growth increased marginally from roughly 6.09 percent to 6.10 percent, signaling a slightly more optimistic long term growth outlook.
Net Profit Margin dipped very slightly from about 30.94 percent to 30.93 percent, implying essentially stable long run profitability expectations.
Future P/E moved down incrementally from 32.46x to 32.43x, suggesting a nearly unchanged earnings multiple in the valuation model.

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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