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Check Point Software (CHKP) PT Lifted To $69 By UBS Securities, 'Buy' Maintained

 April 25, 2012 02:40 PM

(By Balaseshan) UBS Securities analyst Brent Thill increased his price target on shares of Check Point Software Technologies Ltd. (NASDAQ:CHKP) to $69 from $68 while maintaining "Buy" rating.

After the company's first quarter results, the brokerage raised its 2012 EPS estimate to $3.21 from $3.20, while lowering its revenue estimate to $1.386 billion from $1.396 billion and its billings growth forecast to 9.5% from 11.8%. The firm reduced its 2013 revenue growth estimate to 10.5% from 11.5%, while maintaining its EPS estimate of $3.57.

Thill said his industry checks remain healthy so he chalks up product miss on Q1 seasonality and on the margin increased competition.

[Related -Check Point Software Technologies Ltd. (NASDAQ:CHKP): What Could Drive Check Point In 2014?]

However CHKP has remained highly innovative so product revenues should accelerate post Q1 blues and ST deferred down 1.1% sequential was in-line with 4-year seasonal down 1.0% so the billings miss came predominately from volatile long-term deferred. CHKP remains a good growth story with the potential to more aggressively distribute cash to shareholders in 2013.

Thill said his fiscal 2012 adjustments include: product revenue post Q1 miss to up 5.5% year-over-year from up 9.5% partially offset by annuity revised to up 15.0% from up 13.9% prior on continued strong annuity software blade sales.

The analyst believes bias is to upside on product revenues. EPS up $0.01 on margins down 20 basis points versus down 100 basis points prior (Q1 margins up 160 basis points versus his model).

[Related -Check Point Software Technologies Ltd (CHKP): What To Watch In Q2 Results?]

Thill said his other key takeaways are Q1 may have been negatively impacted to a degree by customers pausing appliance purchases ahead of GAiA OS (launched last week), pent-up demand could be incremental for fiscal Q2.

Thill said Europe down 17% sequential was weak versus seasonal down 14%, the region remains highly variable by country though the fiscal Q2 forecast looks positive. Blades were on a $200 million run-rate exiting fiscal 2011 and growing 30%-plus year-over-year.

Check Point Software develop technologies to secure communications and transactions over the Internet by enterprises and consumers. Check Point develops, markets and supports a range of software, as well as combined hardware and software products and services for information technology (IT) security.

CHKP is trading up 0.03% at $59.82 on Wednesday.



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