Nomura Defends Checkpoint Software (CHKP) in Wake of Disappointing Q3

Deceleration in billings momentum was a key factor for investors heading into the release of Checkpoint Software (NASDAQ: CHKP) Q3 results yesterday. With billing growth weakening by 1 percent, well below street estimates, Checkpoint stock tumbled 12 percent.

Analysts at Nomua think the reaction is too extreme, and are defending the stock based on what they view as a potential turnaround in 2013.

"Factors that could help restore even mid-single digits revenue and earnings growth in 2013 include new products, potential for better macro and easier comparisons, continued double digit unit growth with a stabilization in the mix of systems to stabilize ASP's, easing FX headwinds, and a mix shift to 'a la carte blades which have an upfront benefit to revenues," wrote analyst Rick Sherlund.

"We are positive on the name, given its sticky customer base and low 7.4x 2013 EV / uFCF multiple and 8.7x P/E on 2013 EPS estimates ex- cash of $12.45 per share, coupled with a commitment to returning cash to shareholders through robust buybacks," added Sherlund.

Nomura Securities maintained a Buy rating on Checkpoint Software with a revised price target of $52.00 (from $60.00).

For an analyst ratings summary and ratings history on Checkpoint Software click here. For more ratings news on Checkpoint Software click here.

Shares of Checkpoint Software closed at $41.15 yesterday.

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