Check Point Software Technologies Ltd. (NASDAQ:CHKP) shareholders are probably feeling a little disappointed, since its shares fell 4.9% to US$120 in the week after its latest quarterly results. Check Point Software Technologies reported US$509m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.42 beat expectations, being 5.5% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Check Point Software Technologies' 28 analysts is for revenues of US$2.12b in 2021, which would reflect a modest 3.5% increase on its sales over the past 12 months. Statutory per-share earnings are expected to be US$6.03, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.11b and earnings per share (EPS) of US$5.97 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$128, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Check Point Software Technologies analyst has a price target of US$150 per share, while the most pessimistic values it at US$85.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Check Point Software Technologies shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Check Point Software Technologies' revenue growth is expected to slow, with forecast 3.5% increase next year well below the historical 4.7%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% next year. Factoring in the forecast slowdown in growth, it seems obvious that Check Point Software Technologies is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Check Point Software Technologies going out to 2022, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Check Point Software Technologies that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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