Citi has revised its valuation for Check Point Software Technologies Ltd. (CHKP) following a mixed performance in the fourth quarter, citing revenue growth below expectations despite strong operating margins. The move reflects cautious sentiment in the cybersecurity sector.
- CHKP reported Q4 non-GAAP revenue of $304 million, below $308 million consensus.
- Subscription revenue grew 7% YoY; product revenue declined 4% YoY.
- Non-GAAP operating margin reached 48.2%, up from 46.8% in Q4 2024.
- Citi lowered price target to $210 from $235 and maintained a 'Neutral' rating.
- CHKP shares dropped 2.3% in after-hours trading post-announcement.
- No notable impact observed on AAPL or CL=F following the update.
Citi has adjusted its price target for Check Point Software Technologies Ltd. (CHKP) after the company reported fourth-quarter results that fell short of consensus on revenue, though profitability remained resilient. CHKP reported non-GAAP revenue of $304 million for the quarter, slightly below the $308 million expected by analysts. The company’s subscription revenue grew 7% year-over-year, but product revenue declined 4% due to lower enterprise licensing activity. Despite the revenue miss, CHKP maintained a robust non-GAAP operating margin of 48.2%, up from 46.8% in the same quarter last year, driven by disciplined cost management and a shift toward higher-margin subscription services. The company's net income rose to $152 million, a 9% increase from the prior-year period. Citi responded by lowering its price target on CHKP to $210 from $235, citing a more cautious outlook on near-term demand in the enterprise security market. The firm maintained a 'Neutral' rating, noting that while CHKP’s financial discipline remains a strength, macroeconomic headwinds and competitive pressures from peers like Palo Alto Networks and Fortinet could limit growth momentum. The valuation adjustment has prompted modest downward pressure on CHKP shares, which declined 2.3% in after-hours trading. Investors are closely watching whether CHKP can sustain its margin performance while reaccelerating subscription growth. The impact is primarily confined to the cybersecurity sector, with limited spillover to broader tech indices. Apple (AAPL) and crude oil (CL=F) showed no significant correlation to the CHKP update.