BMO Waits On The Sidelines For Better Momentum At Check Point Software

Check Point Software Technologies Ltd. CHKP reported its third-quarter results and announced fourth-quarter guidance broadly in-line with expectations.

The company “did little” to address investor concerns around its longer-term growth potential, according to BMO Capital Markets.

The Analyst

BMO’s Keith Bachman maintained a Market Perform rating on Check Point Software Technologies with a price target of $125.

The Thesis

“We want to see evidence of improving sales momentum before we would consider getting more constructive,” Bachman said in the note.

While meeting third-quarter revenue expectations, Check Point Software Technologies projected sequential revenue growth of around 11%, while is consistent with seasonal trends, the analyst mentioned.

He expressed concern around decelerating subscriptions growth, citing the industry’s transition to SaaS and the more meaningful growth generated by Check Point Software Technologies’ competitors.

The company’s total billings growth missed consensus estimates, with billings actually contracting 3.1% year-on-year, Bachman said.

Citing the relatively weak growth on both revenue and billings, the analyst said that the stock may remain range-bound. He further wrote, “We do not believe that increased sales and marketing initiatives will enable CHKP to grow faster.”

Price Action

Shares of Check Point Software Technologieswere up 3.07% to $112.37 at the time of publishing on Tuesday.