Investing.com -- Shares of Check Point Software Technologies (NASDAQ:CHKP) fell over 1% on Wednesday after Bank of America (NYSE:BAC) downgraded the stock from Buy to Neutral.
BofA cited concerns over the company’s slow growth trajectory and limited upside potential despite recent product investments.
“The focal point of the quarter was the weak billings growth of 5.8% YoY, below the Street’s 8.2%,” analysts wrote.
However, BofA downplayed the importance of the billings miss, stating, “We are less worried about billings and believe it will largely recover next quarter.” Instead, they emphasized broader challenges with the company’s growth.
While Check Point’s Infinity product line grew in the double digits, contributing 15% of total revenue, BofA remains cautious.
“Growth remains within the mid-single digit range, and we think further stock upside potential will be limited until the growth outlook improves,” analysts explained.
BofA reduced its price objective (PO) from $205 to $195, reflecting the company’s subdued growth profile.
The new valuation is based on ~16x 2026 estimated EV/FCF, down from 18x 2025 estimates. “With the stock up 37% over the last 12 months, trading at a ~15x forward EV/FCF multiple, we believe further upside potential is limited,” the note stated.
BofA also raised doubts about Check Point’s ability to achieve double-digit growth in 2025, citing challenges in accelerating product revenues.
For 2025, BofA believes product revenue growth would need to jump from 4% to 20% to hit 10% total revenue growth, which they state is not feasible in the current market environment.
The firm now expects a more modest 5.6% total revenue growth next year, reflecting slower subscription growth and limited product expansion.
