On Jun 27, 2014, we issued an updated research report on
Check Point Software Technologies Ltd.
Check Point is a well-known provider of information technology
(IT) security solutions globally. Sophisticated cyber threats
significantly affect financials, brands and reputation of
enterprises. Consequently, cyber security is becoming a
mission-critical, high-profile requirement. Check Point's wide
experience in the security space and consistent delivery of such
solutions will help it to maintain and grow its market share.
Per a new report from the market research firm IDC, corporate
spending on threat intelligence security services will reach $1.4
billion in 2018 from an estimated $905.5 million in 2014. These
predictions bode well for Check Point which recently launched
ThreatCloud IntelliStore, a threat intelligence marketplace
enabling enterprises to choose from various customized threat
neutralizing solutions. The company has also partnered with the
likes of iSIGHT Partners, CrowdStrike and IID to provide
best-in-class cyber security solutions by leveraging its own
expertise and its partners' solutions.
Check Point's timely product launches as well as product
refreshes also validate its endeavor to provide new and improved
solutions. The company has witnessed a growing demand for its data
center applications such as the new 21700 Appliances and the 13500.
Moreover, the 21000, 13000 and 61000 high-end appliance series
(running on blade architecture) have gained traction. Going
forward, we believe that Check Point will incrementally benefit as
customers upgrade to the software blade architecture related to
Threat Emulation, Application Control and Compliance, and the
subsequent updated versions.
Among other factors, Check Point's revision of its share buyback
plan to $200 million per quarter (aggregate of $1.0 billion) from
$135 million per quarter will also bode well for its earnings.
Nonetheless, Check Point competes with numerous big and small
companies in the security application market. According to IDC,
Check Point secured the second position in the worldwide security
appliance revenues in the first quarter of 2014. Check Point
trailed industry leader
) and was followed by
However, among the top three vendors, only Check Point's market
share contracted on a year-over-year basis (from 12.9% in
first-quarter 2013 to 12.8% in first-quarter 2014) and
recorded the lowest year-over-year revenue growth (7.7%
Moreover, we believe that Check Point's dominance could be
challenged by new entrants. This could lead the company to resort
to competitive pricing to maintain and capture further market
Additionally, Check Point is largely dependent on indirect
channels for selling its products. The company derives a
significant portion of the total sales from the 10 biggest
distributors. We believe that this level of dependence increases
concentration risk. If these distributors reduce their purchases
due to supply chain or competitive issues (focusing on sales of the
products of competitors), Check Point's business would be adversely
Currently, Check Point has a Zacks Rank #3 (Hold). Investors may
consider a better-ranked stock like
) sporting a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
CHECK PT SOFTW (CHKP): Free Stock Analysis
CISCO SYSTEMS (CSCO): Free Stock Analysis
MICRON TECH (MU): Free Stock Analysis Report
FORTINET INC (FTNT): Free Stock Analysis Report
To read this article on Zacks.com click here.