Raymond James downgrades Check Point on worsening channel trends

Investing.com -- Raymond James downgraded Check Point Software Technologies to Market Perform from Outperform, saying improving investor sentiment toward the cybersecurity sector is at odds with worsening business fundamentals and weakening channel trends, suggesting the company's turnaround could take longer than previously expected.

The brokerage also removed its $160 price target, as it does not assign targets to Market Perform-rated stocks.

Raymond James said recent partner checks point to deteriorating demand, with bookings weakening across the board, a bleak second-half sales pipeline, and emerging customer churn. The firm cited growing demand for endpoint security in the AI era, operational disruptions following management changes, and fading optimism around new CEO Nadav Zafrir after execution missteps.

The brokerage warned that Wall Street's forecasts remain too optimistic, arguing current consensus expects a meaningful acceleration in product revenue, subscription growth, billings, and earnings despite limited evidence of an operational recovery. Raymond James said its own fiscal 2027 estimates remain below consensus based on current business trends.

Although Check Point trades at roughly 13 times forward earnings and just over four times enterprise value to revenue, Raymond James said the valuation is justified given the company's lack of sustained earnings growth. It cautioned that, without a credible return to growth, the stock could continue to trade closer to lower-valued, no-growth software peers.

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