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Check Point Rides On Subscriptions & Cloud Solution Adoption

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On Sep 25, we issued an updated research report on Check Point Software Technologies Ltd. (CHKP - Free Report) .

The company is a provider of policy-based enterprise security and traffic management solutions. Through its patented Stateful Inspection technology, it delivers Secure Enterprise Connectivity solutions that protect information assets and enhance the performance of enterprise networks.

Notably, Check Point has beaten the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 3.91%.

We believe that impressive results will help sustain the stock’s momentum. Notably, shares of Check Point have gained 14% year to date, outperforming the industry’s rally of 12.7%.


Factors Influencing the Stock

Continued strength in security subscription is a major catalyst behind Check Point’s growth. It is witnessing a large number of subscriptions, which will translate into significant revenues in the months ahead.

Check Point is gaining traction from growing adoption of its cloud-based solutions. Per MarketsandMarkets, the cloud security market size is expected to grow at a CAGRof 25.5% during 2017-2022. This projection bodes well for the company, which witnessed healthy growth in both private and public cloud networks in the last-reported quarter.

Check Point’s rich experience in the security space and continued delivery of mission-critical solutions are helping it maintain and grow its market share. Per Grand View Research, global threat intelligence market will reach $12.6 billion by 2025, depicting CAGR of 17.4% from 2017 to 2025. This prediction bodes well for Check Point, which is committed to provide advanced cyber security solutions to customers.

Notably, performance of the U.S sales force, which negatively impacted revenues in the fiscal first quarter, showed improvement in the second quarter, and results were on par with the company’s expectation. This reflects solid sales execution steps being taken by the company.

Check Point is winning new customer accounts, which is driving revenue growth. In the second quarter of fiscal 2018, customers who signed deals worth $50,000 and higher, contributed 76% to the total order value. Growing percentage of large deals in the mix is a positive because it increases deferred revenues and visibility.

Check Point currently carries Zacks Rank #2 (Buy).

A few other top-ranked stocks in the broader Computer and Technology sector are Fortinet, Inc. (FTNT - Free Report) , Apple Inc. (AAPL - Free Report) and Radware Ltd. (RDWR - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Fortinet, Apple and Radware is pegged at 16.8%, 9.7% and 19%, respectively.

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