Wall Street analysts are generally bullish, but it’s still pretty rare that they all agree that a stock is rising. But one cybersecurity actions does the trick, which is worth a closer look.
The lowest price target on Wall Street for Checkpoint Software (NASDAQ:CHKP) is sitting at $195, or about 8.6% above its market price at the time of writing. Interestingly, more analysts are saying the stock is a Hold rather than a Buy. This may be because it is not growing as fast as some of its cybersecurity competitors. But Check Point’s slower, steadier growth could mean a bigger payoff for patient, long-term investors.
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Cybersecurity is a growing industry as more companies move their operations from on-premises to the cloud. This situation has accelerated in recent years as more companies support remote work, requiring more software security protocols to prevent unauthorized access to proprietary data and systems. This has also pushed companies to consolidate their security systems with a single vendor, making them easier to manage.
This has led many cybersecurity companies to spend aggressively to acquire technology and market their services. Check Point has always been much more conservative in its strategy, keeping operating expenses and capital investments low. Consequently, it is adjusted operating margin of 42% last quarter is one of the best in the sector.
But the company is starting to increase its expenses. It recently acquired Lakera, a security platform specializing in AI agents. Additionally, the company is increasing its spending on R&D, sales and marketing, focusing on developing its software solutions for endpoint security (for remote workers) and security operations (to identify and mitigate attacks across devices). Both have much higher margins than its existing firewall hardware business.
That said, the hardware sector remains a key source of strength for Check Point. Its Infinity platform brings together all of its products, allowing companies to consolidate their cybersecurity needs with Check Point, a major issue for many customers. With its leadership position in hardware, it is well-positioned to grow its software business while spending more on marketing and R&D. As a result, the company is poised for strong earnings growth, although it still isn’t growing revenue as quickly as its more aggressive competitors.
