On Wednesday Cantor Fitzgerald has initiated coverage on Checkpoint Software (ETR:SOWGn) (NASDAQ:CHKP), assigning a Neutral rating to the cybersecurity firm's stock along with a 12-month price target of $200. The new target is based on a valuation of 7.3 times the company's estimated fiscal year 2025 revenue.
Checkpoint Software, known for its network security solutions, has been acknowledged for preserving its customer base and staying competitive through strategic acquisitions and consistent performance. Despite growing at a slower pace compared to its peers, Checkpoint Software is recognized for its reliable cash flows, robust profit margins, and potential growth from its subscription software segment and targeted acquisitions of smaller companies.
The firm currently trades at a discount, with a multiple of 7.5 times its forecasted fiscal year 2025 enterprise value to sales, while competitors trade at an average of 10.3 times. This valuation gap mirrors concerns about Checkpoint's slower growth, which is projected at 5.5% for fiscal year 2025, matching consensus expectations but trailing behind the double-digit growth rates of its more rapidly expanding peers.
Cantor Fitzgerald's outlook for Checkpoint Software is positive in the short term, anticipating a rebound in fourth-quarter billings and successful integration of recent acquisitions CyberInt and Perimeter81. The firm also expects that the leadership of incoming CEO Nadav Zafrir will provide a fresh perspective.
Looking ahead, the Cantor Fitzgerald analyst believes that Checkpoint's integrated Infinity platform will aid in driving consistent top-line advancements. Moreover, the company's sustained operating margins of over 42% establish it as a distinctive investment opportunity in the market. The Neutral rating reflects a balanced view of the company's stable financial position against the backdrop of modest growth expectations.
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