Check Point Software Stock, Is There Upside Potential?

Check Point Software

Check Point Software (NASDAQ:CHKP) shares have been under pressure over the last five months, due to lower than expected financial numbers. CHKP shares are trading around $103 a share, down significantly from the 52-week high of $118 a share. Lower financial numbers and a bleak outlook also forced analysts to lower their price targets for Check Point Software stock, yet their price target represents substantial upside from the current level.

Check Point Software

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RBC Capital Markets has lowered its price target for CHKP stock by $5 to $115. The firm blamed sales execution issues in the United States for a lower price target.

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BMO has also dropped its price target to $114, due to concerns over the sustainability of network security growth rates.

Lower than Expected results For Check Point Software Impacted Sentiments

Though Check Point Software has beaten earnings estimates for the fourth quarter by a small margin of $0.08 per share, its revenue missed analyst’s expectation by $2.58 million and increased only at 4% compared to the double-digit growth in previous quarters.

Its products and licenses revenue, which accounts for almost half of total revenues, declined 6% year over year in the fourth to $165.7M. On the positive side, its Security Subscriptions revenue jumped 23% year on year in the fourth quarter, while Software and maintenance revenue rose 6% over the past year quarter.

Lower financial numbers led the company to reduce its outlook for the first quarter of FY2018. The company now expects its revenues to land in the range of $440 million, down from the consensus estimate of $460 million. Expectations for earnings per share also declined to $1.25 from an earlier estimate of $1.32 per share.

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Stocks Could Rebound Amid Analysts Price Targets

Trading around $103 a share, CHKP share price is down significantly from an average price target of $115 a share. Also, the company expects to regain momentum in the second half of the year – with expectations for the full-year revenue of $200 billion compared to the consensus estimate for $197 billion. Check Point Software also appears in a strong cash position to invest in growth opportunities along with working on share buyback program. Last year, the company bought 9.5 million outstanding shares, while it plans to extend buybacks into this year.

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