TD Cowen has reaffirmed its Buy recommendation on Check Point Software (NASDAQ: CHKP) and assigned a price target of $260.00, which represents approximately 59% upside from the company's recent share price of $163.60. Current trading has been near multi-month lows, with the stock close to a 52-week trough of $161.00.
The research house projects an acceleration in revenue growth to about 8% year-over-year as fiscal 2026 unfolds - a pace that would exceed the midpoint of management guidance at 6%. TD Cowen pointed specifically to a 9% year-over-year increase in fiscal 2025 billings as an indicator that fiscal 2026 revenue could outpace initial expectations.
Analysts at the firm also flagged go-to-market initiatives as a source of potential upside, anticipating that execution in sales and distribution will produce favorable results over the course of the fiscal year. Management's deliberate use of cash to repurchase shares - estimated at 3% to 5% of the outstanding float annually - was highlighted as providing a valuation cushion to investors. Separate data highlights management's aggressive buyback activity as a notable characteristic of the company's capital allocation approach.
On valuation, TD Cowen considers Check Point appealing on a forward basis. The firm frames its thesis around a fiscal 2027 price-to-earnings multiple of 20 times, excluding cash, and notes the current market multiple sits at roughly 17 times. Check Point's price/earnings-to-growth ratio was cited at a low 0.58, which TD Cowen interprets as the stock trading at a discount relative to its anticipated growth profile.
The company recently released fourth-quarter fiscal 2025 results that delivered an earnings-per-share figure of $3.40, beating consensus analyst expectations of $2.76 - a surprise of about 23.19%. Revenue for the quarter came in at $744.9 million, narrowly missing the $746.33 million analyst estimate. On a product line basis, Check Point reported product revenue of $171.8 million, below the Street estimate of $180.1 million.
Market response from sell-side analysts following the quarter showed a range of adjustments. Stephens trimmed its target to $210 while retaining an Overweight rating and pointed to the impact of a shift toward subscription consumption on product revenue. FBN Securities reduced its target to $200 and maintained an Outperform stance, citing sector dynamics in software. Cantor Fitzgerald lowered its target to $190 and kept a Neutral rating, referencing missed top-line expectations. BTIG remained Neutral, noting that billings exceeded expectations but operating income was slightly under forecast.
The mix of results - stronger-than-expected EPS alongside a slight revenue shortfall and product revenue miss - underpins the divergent views among analysts. TD Cowen's bullish case rests on billings momentum, improved go-to-market execution, ongoing share repurchases, and a valuation that it deems attractive on a fiscal 2027 basis.
Key takeaways
- TD Cowen reiterated Buy with a $260 target, implying roughly 59% upside from about $163.60.
- Firm expects revenue growth to accelerate to 8% in fiscal 2026 and cites 9% billings growth in fiscal 2025 as a positive signal.
- Recent quarter showed an EPS beat of $3.40 versus $2.76 expected, while revenue and product revenue slightly missed forecasts.
Sector impact
- Cybersecurity and broader enterprise software markets are most directly affected by the companys results and guidance.
- Capital allocation trends such as share buybacks bear on equity valuation dynamics across the tech sector.
Risks and uncertainties
- Top-line execution risk - revenue and product revenue slightly missed expectations in the most recent quarter, which could signal demand or mix pressures in product sales.
- Transition risk - the shift toward subscription models was cited as a factor affecting product revenue, creating near-term variability in line-item performance.
- Profitability sensitivity - although billings were stronger than expected, operating income was noted as slightly below forecasts by one broker, highlighting potential margin or cost pressures.