Analyst Note| Mark Cash |
Narrow-moat Check Point Software’s 4% year-over-year revenue growth and non-GAAP EPS of $2.17 came in ahead of FactSet consensus estimates. Billings were up 8% year over year, and all revenue segments showed growth. While we believe the quarter showcases nice traction with the business shifting toward security subscriptions, the company’s growth continues to lag competing security vendors. Check Point will be dialing up investments within development and sales and marketing in 2021 as it focuses on three major areas: remote access security, cloud security, and Quantum network security. The three families will have unified management and control capabilities. We believe these are prudent areas to capitalize on the major trends of organizations challenged by users accessing corporate resources outside of a secure perimeter, proliferation of attacks within cloud ecosystems, and the demand for a platform approach to simplify security management. Our fair value estimate of $132 is unchanged, and we consider shares slightly undervalued.