UPDATE: BofA Securities Upgrades Checkpoint Software (CHKP) to Buy
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BofA Securities analyst Tal Liani upgraded Checkpoint Software (NASDAQ: CHKP) from Underperform to Buy, PT $140.00 (from $130.00).
The analyst comments "In the past few quarters, Check Point has seen accelerated revenue growth from lowsingle digit to mid-single digit YoY growth, supported by its CloudGuard and Harmony platforms, as well as continued triple-digit growth in the company’s Infinity platform. Additionally, in the past quarter, the Americas grew 4.5% YoY versus negative to flat growth in the prior quarters, benefitting from new sales leadership. With over 40% of total revenues, the Americas is an important vertical for the company for overall growth and share dynamics. Furthermore, product revenue, which is comprised of the Quantum firewall portfolio, was up 6% YoY last vs -1% last year, driven by a product cycle and recent investment in sales and marketing. While we still believe that Check Point lacks the proper fundamentals for sustained accelerated growth in the longer term, we believe that in the near term the company will be able to outperform on a relative basis given lower expectations and growth acceleration. In addition, we flag Check Point as giving investors one of the highest levels of visibility and stability over the next few quarters. At a recent conference, Check Point management expressed interest in making more acquisitions and stated that the company has already reached its recruiting target this year. In 4Q21, management noted its goal to grow FY22 sales force by 25%, which we note is aggressive and will weigh on margins; however, we flag the upside to revenue growth once the new teams are ramped up. As such, we upgrade Check Point to Buy from Underperform and raise our PO to $140 from $130, now based on roughly 12x 2023E EV/FCF versus ~11x prior.."
Shares of Checkpoint Software closed at $123.75 yesterday.
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