Check Point Software Technologies (CHKP): A Fresh Look at Valuation After Recent Share Price Pullback

Check Point Software Technologies (CHKP) has seen its shares fluctuate in recent weeks, with the stock trailing off about 12% over the past 3 months. The company’s recent returns come as investors look for directional signals on its outlook and strategic moves.

See our latest analysis for Check Point Software Technologies.

After a strong start earlier this year, Check Point’s share price momentum has cooled, with a 6.3% decline over the past month and a 12.2% drop in the last quarter. Despite the recent slide, its three- and five-year total shareholder returns of 48% and 66% respectively show the company has delivered for longer-term investors and keep it in the frame for those weighing prospects against renewed risk sentiment.

If you’re looking for timely discovery opportunities in technology and AI, check out the full list of companies shaping the sector with our screener: See the full list for free.

With Check Point's shares now trading below analyst targets and recent declines weighing on sentiment, investors face a crucial question: is this a compelling entry point, or is future growth already fully reflected in the price?

Most Popular Narrative: 14% Undervalued

With Check Point Software Technologies' fair value put at $223.05 in the most popular narrative, and the last close at $191.72, analysts see a significant gap between future potential and today’s price. The calculations behind this view pull together key revenue and margin expectations, projecting growth that could influence the company’s share rating and longer-term outlook.

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.

Read the complete narrative.

Want to know how this narrative arrives at such a bullish price target? The secret mix includes ambitious growth forecasts, rising earnings, and a bold profit multiple well above today’s. Get the real details behind these numbers and see the exact modeling that supports the valuation to find out what assumptions drive this compelling story.

Result: Fair Value of $223.05 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent competitive pressures or macroeconomic uncertainty could disrupt execution and delay growth forecasts. This could challenge the current bullish narrative around Check Point.

Find out about the key risks to this Check Point Software Technologies narrative.

Another View: Looking at the Numbers

While analyst forecasts see Check Point as undervalued, our SWS DCF model arrives at a much more cautious conclusion. According to this method, the current share price actually sits above our estimate of fair value. This sparks the question: are analyst targets too optimistic, or is the DCF model missing upside drivers?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Check Point Software Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Check Point Software Technologies Narrative

If you have a different perspective or want to dig into the numbers yourself, you can craft a personalized narrative in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Check Point Software Technologies.

Looking for more investment ideas?

Smart investors always keep their eyes open for what’s next. Do not limit your portfolio; expand your possibilities by uncovering standout opportunities across tech and growth sectors with these dynamic searches.

• Supercharge your watchlist by targeting these 870 undervalued stocks based on cash flows with strong upside potential based on cash flows and proven fundamentals.
• Catch the wave of progress as you tap into the explosive potential of these 27 AI penny stocks, where artificial intelligence is driving tomorrow’s industries.
• Secure future returns by targeting income through these 19 dividend stocks with yields > 3%, focusing on stocks that reward shareholders with yields above 3%.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com