Check Point Software reported better-than-expected fourth quarter earnings on Wednesday driven largely by the increased necessity for cybersecurity.
Check Point’s (CHKP) Q4 revenues of $564 million beat analysts’ estimates of $556 million and grew by 4% year-over-year. Earnings grew by 7% from a year earlier, coming in at $2.17 and beating analysts’ forecasts of $2.11.
Meanwhile, full year revenues for 2020 increased 4% to $2.06 billion and earnings for the year grew 11% to $6.78.
The outbreak of the coronavirus and the resulting change in the working environment accelerated organizations’ transition to the cloud, and Check Point was able to capitalize on this need by expanding its CloudGuard security platform.
“Business in our fourth quarter grew across all focus areas including cloud, network and remote access security…This reflects the continued execution of our strategy and the importance of cyber security during these unprecedented times,” said Gil Shwed, Founder and CEO of Check Point.
“The global pandemic drove the new normal, a hybrid work environment and accelerated digital transformation that created security challenges across all types of organizations,” Shwed added.
Evercore ISI analyst Irvin Liu initiated a Hold rating on CHKP last week, setting his price target at $140. This implies upside potential of around 15% from current levels.
Liu believes that CHKP is a “solid defensive holding” but in order for the share price to re-rate, Check Point may need to deliver several quarters of sustainable growth acceleration.
Consensus among analysts is a Hold based on 3 Buys, 8 Holds and 2 Sells. The average analyst price target of $137.25 suggests upside potential of around 12% over the next 12 months.
Check Point receives a Market Neutral 4 out of 10 on TipRanks’ Smart Score, which implies that the stock is projected to behave in line with market expectations.