Check Point’s Slow Q2 Guidance Drags On Rival Palo Alto Networks

By | April 20, 2016

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Check Point Software Technology ( CHKP ) stock fell Wednesday, tugging down shares of rival Palo Alto Networks ( PANW ) as well, after the No. 1 cybersecurity firm by market value topped earnings views by 3 cents but guided to decelerating Q2 metrics. In early trading on the stock market today , Check Point shares plunged as much as 6.6% before recovering a bit to a 4.5% loss Wednesday morning, near 85. Palo Alto Networks stock was down nearly 2%. Shares of both underperformed IBD’s 25-company Computer Software-Security industry group, which was weaker by nearly 1% Wednesday morning. The group is down 15% this year vs. a 20% drop in Palo Alto Networks stock and a 9% jump in Check Point stock. For Q1, Check Point reported $404 million in sales and $1.06 earnings per share ex items, up a respective 9% and 11% vs. the year-earlier period. The consensus of 34 analysts polled by Thomson Reuters modeled $404 million and $1.03. Check Point has reported 9% sales growth for the past six quarters, and EPS minus items has grown by double digits for the past five consecutive quarters. The company modeled $405 million to $435 million in current-quarter sales and $1.02 to $1.09 EPS minus items. At the midpoints, that’s up 6% and 7%, respectively. But the midpoints of both measures missed consensus views for $428 million and $1.09. And Check Point’s guidance reflects EPS deceleration from double digits and a decline from the company’s typical 9% sales growth. Check Point maintained its full-year guidance for $1.72 billion to $1.79 billion in sales, up 8%, and $4.45-$4.60 EPS minus items, up 9%. FBN analyst Shebly Seyrafi retained an outperform rating and 100 price target on Check Point stock, noting that the company typically delivers results at the high end of guidance. “Our own channel checks on Check Point noted that Check Point was discounting more in order to compete more effectively against Palo Alto Networks, Fortinet ( FTNT ) and others,” he wrote in a research report. Scalper1 News

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