Check Point Software Technologies Ltd.: Cybersecurity Stock Remains Bullish

Check Point Software Stock Up 53% Since March

The recent Twitter Inc (NYSE:TWTR) hack is another big reminder of just how important digital security is. On top of that, because of COVID-19, more people are working remotely and cyber-attacks have become more sophisticated.

This has intensified the need for companies to ensure that their information is protected in the cloud. One company that has been leading the charge is Check Point Software Technologies Ltd. (NASDAQ:CHKP).

Check Point Software stock has advanced more than 50% since the pandemic-charged sell-off in March. And thanks to solid second-quarter results that beat revenue and earnings estimates, the company’s outlook remains robust.

CHKP Stock Overview

Based in Tel-Aviv, Israel, Check Point Software Technologies is a leading provider of cybersecurity solutions to more than 100,000 businesses and other organizations in 88 countries. (Source: “Check Point Company Overview,” Check Point Software Technologies Ltd., last accessed July 27, 2020.)

A pioneer in firewall technology, Check Point sells its security products to a large number of Fortune and Global 100 companies.

Its technology protects its customers from cyber-attacks with an industry-leading catch rate of ransomware, malware, and other types of attacks. Check Point’s “Infinity” platform is the only consolidated cybersecurity product that works across cloud, mobile, networks, endpoints, and the Internet of Things.

In addition to providing some of the world’s most advanced cybersecurity technology, Check Point has a long history of making strategic acquisitions. Since 2004, it has announced 13 acquisitions, most recently Dome9 Security Inc. (October 2018), ForceNock (January 2019),  Cymplify (November 2019), and Protego (December 2019).

Chart courtesy of StockCharts.com

Check Point Software stock has had great momentum since the broader market tumbled in February and March. Since then, the company has seen its share price advance more than 50%, erasing the COVID-19-related sell-off and ratcheting up a new 52-week high.

While short-term profit-taking could be in the works, the company’s long-term outlook remains excellent.

Q2 Revenue & Earnings Topped the Estimates

On June 22, Check Point announced that its revenue for the second quarter ended June 30 increased four percent year over year to $506.0 million. Deferred revenue of $1.3 billion was also up four percent. (Source: “Check Point Software Technologies Reports 2020 Second Quarter Financial Results,” Check Point Software Technologies Ltd., June 22, 2020.)

Check Point reported second-quarter net income of $196.0 million, a five-percent increase over the 2019 second-quarter net income. Second-quarter earnings per share (EPS) jumped 14% year over year to $1.38 per share.

Adjusted net income was up 6.6% year over year at $225.0 million, while adjusted EPS advanced 14.5% to $1.58.

Cash flow from operations came in at $252.0 million, an eight percent increase year over year.

Check Point ended the second quarter with cash, marketable securities, and short-term deposits of almost $4.0 billion.

During the second quarter, the company repurchased about 3.1 million of its own shares for about $325.0 million.

“Sales increased across multiple categories and segments, including our advanced technologies such as cloud, endpoint, and high performance network security,” said Gil Shwed, founder and CEO. (Source: Ibid.)

Analyst Take

Check Point Software Technologies Ltd. is an excellent stock for trying times.

Despite the rising impact of the COVID-19 pandemic, the company reported solid second-quarter results, with earnings and revenue topping expectations. Check Point has a history of doing that; for each of the last four consecutive quarters, the company has surpassed EPS expectations.

With more and more employees shifting to working remotely, CHKP stock will continue to be one of the most compelling cybersecurity stocks to watch.