[August 07, 2011] Merrill Lynch raises Check Point to 'Buy,' sees 20 percent upside Tweet Jul 19, 2011 (Globes - McClatchy-Tribune Information Services via COMTEX) -- Merrill Lynch has raised its recommendation on Check Point Software Technologies Ltd. (Nasdaq: CHKP) to "Buy" from "Neutral." At the same time, Merrill Lynch has raised its target price for the company share price from $59 to $71. Check Point's share price rose 8.1 percent yesterday on Nasdaq to $61.17, giving a market cap of $12.73 billion, after the company published positive second quarter results. Merrill Lynch gave three reasons for its decision. The first reason is that it sees Check Point emerging as a security appliance platform. Merrill Lynch wrote, "Check Point's transition from being a niche firewall security provider to a security platform is bearing fruit. IPS (intrusion prevention) is still the largest software blade, however URL filtering, email security, end point, application control, mobile etc. are gaining traction. With a broad security portfolio, CHKP is able to consolidate point products from smaller competitors and gain wallet share. Moreover, Check Point's hardware appliance and software blade architecture allows it to target new security mrkts without breaking the bank with large acquisitions or diluting Op margins." For its second reason Merrill Lynch cited, "Increasing subscription revs mix can help support high margins. We estimate Check Point has roughly 50 percent recurring revs today, which can grow with broader adoption of its software blades. Check Point's strong product revs growth creates fertile ground to harvest high margin, recurring subscription revs from annuity software sales. A majority of Check Point's software blades are on subscription with high renewal rates which can help support and grow its high margins (57 percent)." For its third reason, Merrill Lynch said, "Defensive play with share gain potential With a strong product portfolio, we believe Check Point has ability to outgrow peers in a relatively defensive IT spend environment. Security remains a key area of IT spend for CIOs. With new guidance, Check Point appears to be on track to grow 12-14 percent in 2011, but management has a track record of being conservative and upside exists if Check Point executes." Yesterday Check Point Revenue published its results for the second quarter of 2011. Revenue was up 15 percent to $300.6 million from $261.1 million for the corresponding quarter of 2010, and non-GAAP operating profit was up 18 percent to $171 million for the second quarter from $144.7 million, from the corresponding quarter. To see more of the Globes or to subscribe to the newspaper, go to http://www.globes.co.il/serveen/globes/nodeview.asp?fid=942. Copyright (c) 2011, Globes, Tel Aviv, Israel Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com. [ Back To TMCnet.com's Homepage ]