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[siscoinvestor]

Goldman Sachs: Check Point’s accounting is very clean and simple

Avi Weinreb
04.03.2002 16:48

Goldman Sachs said today that it was comfortable with its view that the near-term obstacle facing Check Point (Nasdaq: CHKP) was sluggish IT spending, rather than other challenges that have concerned some investors. The comments followed speculation in the press about possible accounting concerns over Check Point’s Sofaware investment.
Analyst Elan Zivotofsky said, “Recently we have heard concerns regarding the structure of Check Point’s holding in SofaWare. Overall, we should note that Check Point’s accounting is very clean and simple and the company generates huge free cash flow. Moreover, it`s handling of the SofaWare subsidiary is according to accounting rules regarding minority owned subsidiaries and in some ways is more conservative than required.”

“Currently trading 23 times and 18 times our 2002 and 2003 EPS estimates, we stress that the current valuation represents a significant discount to the overall infrastructure/security software group. We believe investor sentiment on Check Point is quite negative as investors are focused on the very tough near-term environment, and on a lack of sequential growth in the first quarter of 2002 (based on guidance),” the analyst continued.

Goldman Sachs analysts recently met with Check Point CEO and chairman Gil Shwed and said they came away more comfortable and positive about the company`s strategy and long-term position in the network security market.

“We believe sequential growth will resume in the second quarter, and that investors with a medium-to-long-term investment horizon should use current levels to build positions in what we believe is one of the highest quality names in the information security arena,” Zivotofsky said.

Goldman believes that Check Point will show strong growth relative to the overall technology sector in 2002, despite near-term uncertainty, because of the increased focus on security spending and under- penetrated markets. The investment bank is also encouraged by the company’s new product cycles, such as S-Box, and sees continued very high profitability in the future.

The increased focus on security spending is also referred to in RBC Capital Markets’ latest update on Check Point, which was published today. RBC says Check Point is well positioned to benefit from US government spending on IT security, which is expected to reach approximately $4 billion in fiscal 2003, up 60% from fiscal 2002.

RBC analyst Stephen Sigmond said, “Check Point is an established vendor under the National Security Agency’s common criteria, enabling it to sell to numerous government agencies, directly and through distributors. We believe that government related orders are likely to be meaningful catalysts starting second half of this year.”

“Given the current valuation, Check Point’s leadership position, a new product cycle taking hold, and little competitive pressure, we believe the stock offers solid value at current levels. We are reiterating our Outperform rating with an Above Average Risk rating,” the RBC analyst concluded.

Check Point shares closed on Nasdaq at $30.16 on Friday.

Published by Israel`s Business Arena on 4 March, 2002

[siscoinvestor]

03/04/02 08:53 AM
Source: C.E. Unterberg Towbin

Check Point Software

Katherine Egbert

Company Update

Symbol Rating Price Mkt. Cap. ‘02E ‘03E Pr. Target

CHKP*+ MP/B $30.16 $6,551 $1.27 $1.46 $44

HEADLINE: Q1 Tracking Well Thus Far

* Check Point’s Q1 appears to be tracking our $126.2 million revenue, $0.29 EPS estimates.

* The $300 S-box generated revenues of $1 million in January. Channel checks indicate strong S-box demand in both the ROBO and service provider markets, so strong, in fact, that Check Point may be capacity constrained.

* Channel partners report that customers are buying the S-box with SecureClient (pushes out firewall policy to remote clients; priced at $100/seat). S-box also ties in with CheckPoint’s core offerings, allowing end-to-end firewall/VPN management from a central office. This enables customers’ standardizing around one vendor

* We are shaving our 12-month price target for CHKP from $50 to $44 to reflect a more conservative long-term growth rate estimate (15%, down from 17%).

* We reiterate our Market Perform/Buy rating, but believe that early investors could benefit from buying CHKP at this time, in anticipation of a broader IT recovery later this year. CHKP trades at 20.7X our 2003 EPS estimate of $1.46.

http://news.cnet.com/investor/brokeragecenter/newsitem-broke…

[siscoinvestor]

Check Point Software: Recommended List
Die Analysten von Goldman Sachs bewerten in ihrer Analyse vom 4. März das Unternehmen Check Point Software Technologies weiterhin mit „Recommended List“.

Nach Einschätzung der Analysten werde Check Point im Jahr 2002 relativ gegenüber dem Technologiesektor starkes Wachstum aufweisen, was sich insbesondere in höheren Ausgaben für Sicherheit und wenig durchdrungene Märkte begründe. Des weiteren sei mit diversen neuen Produkteinführungen zu rechnen, wie etwa NG, S-Box und zahlreiche neue OEM VPN – Anwendungen. Sowohl absolut als auch relativ würden Profitabilität und die positiven Cash-Flows auf einem nach wie vor hohen Niveau bleiben.

Die negative Haltung der Investoren gegenüber Check Point sei auf das kurzfristig schwierige Umfeld zurückzuführen. Anleger mit einem Horizont von 6-12 Monaten hätten nun aber einen sehr attraktiven Einstiegszeitpunkt. Ein sequenzielles Wachstum erwarten die Analysten ab dem zweiten Quartal.

05.03.2002 10:03:33 Quelle: finanzen.net