Last Update 27 Nov 25
Fair value Decreased 0.067%CHKP: Sustained 20% Q3 Billings Momentum Will Support Bullish Outlook
The analyst price target for Check Point Software Technologies has been modestly raised, with consensus moving upward by several dollars to reflect strong Q3 billings growth and solid performance. However, analysts continue to note some uncertainties around growth sustainability and future margin pressures.
Analyst Commentary
Analyst opinions on Check Point Software Technologies reflect a mix of optimism about recent execution and ongoing caution about longer-term dynamics. The recent series of price target adjustments underscores both strengths and challenges seen by the Street.
Bullish Takeaways- Billings growth of 20% in Q3 was highlighted as a positive surprise, far exceeding consensus expectations and signaling strong commercial momentum.
- Bullish analysts recognize Check Point's ability to maintain industry-leading operating margins, contributing to the company’s premium valuation multiples.
- Some see Check Point as well positioned to sustain mid-to-high single-digit top-line growth. Combined with robust profitability, this provides resilience despite macro uncertainties.
- Share price targets were notably raised in response to the strong quarterly results. Several analysts noted attractive risk-reward at current levels.
- Bearish analysts caution that growth sustainability remains uncertain. They highlight concerns about the pace and duration of recent improvements in billings.
- Margin pressures are flagged as a medium-term risk. Some expect industry competition and normalization of one-time benefits to weigh on future profitability.
- There was mention of push-outs and pull-ins between quarters, bringing some volatility and questions about the true underlying growth trajectory.
- Competitive pressures in the network security space are intensifying. This could challenge Check Point’s ability to consistently outpace industry growth rates over the next few years.
What's in the News
- RBC Capital raised Check Point Software Technologies' price target to $215, citing strong Q3 results with billings growth of 20% and impressive performance across key metrics (RBC Capital).
- Check Point announced a collaboration with Microsoft to bring enterprise-grade AI security to Microsoft Copilot Studio by integrating AI Guardrails, Data Loss Prevention, and Threat Prevention capabilities for safe AI agent deployment.
- Guardz formed a partnership with Check Point to embed Harmony Email into the Guardz security platform, providing MSPs with advanced email security and a high block rate for phishing attempts.
- Check Point, in partnership with Lakera and the UK's AI Security Institute, launched the Backbone Breaker benchmark to test and improve the security of large language models within AI agents using real-world adversarial scenarios.
- The company introduced AI Cloud Protect with NVIDIA, offering full-stack security with zero performance impact for on-premises AI model development and deployment. This solution is validated on NVIDIA RTX PRO Servers and focuses on protecting data and AI infrastructure.
Valuation Changes
- The Fair Value Estimate has decreased slightly, moving from $228.56 to $228.40.
- The Discount Rate has fallen modestly from 10.64% to 10.55%.
- The Revenue Growth Projection remains unchanged at approximately 6.09%.
- The Net Profit Margin is stable, holding at about 30.94%.
- The Future P/E Ratio has increased from 30.59x to 32.36x.
Key Takeaways
- 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.
- 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 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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