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Check Point Software Technologies (CHKP) is scheduled to announce its first quarter 2011 results on April 14, 2011, before market opens and we see limited revisions in analyst estimates at this point.

Fourth Quarter Overview

Check Point’s fourth quarter revenue increased 17.1% from the year-ago period led by strong Product revenues across all geographical regions. The quarter’s revenue had surpassed the company’s guided range.

On a GAAP basis, net income per share surged 25.5% year over year to 64 cents. Excluding the impact of charges related to amortization of intangible assets, but including stock-based compensation expense, adjusted net income per share climbed 22.8% year over year to 70 cents.

Check Point delivered an impressive fourth quarter, beating Zacks Consensus Estimates both in respect of revenue and earnings per share. The outperformance was largely based on continuous networking product adoption including the IP series, Power-1, UTM-1 and Smart-1 solutions.

Check Point has earned a reputation among customers and analysts for providing simple, all-in-one security solutions that provide the highest level of protection to small and mid-sized businesses and remote/branch offices. Hence, we believe new product ramps will better serve the growing demand for Check Point’s security products.

Agreement of Analysts

Out of the ten and twelve analysts providing estimates for the first quarter and fiscal 2011, respectively, none revised their estimates upward in the past 30 days. Also, there was no estimate revision for fiscal 2012.

The limited number of changes to estimates point to the fact that there was no major catalyst during the quarter that could drive results. Consequently, most of the analysts are sticking to the estimates they projected post fourth quarter earnings.

The analysts are confident about Check Point’s market share gain versus tech giant Cisco Systems Inc. (CSCO) based on strong demand for its high-end (Power-1) and mid-range (UTM-1) appliances. The analysts are also optimistic about the improved enterprise information technology spending environment.

Magnitude of Estimate Revisions

There was no change to the Zacks Consensus Estimates for the first quarter and fiscal 2011 over the past 30 days. However, the first quarter estimate moved up a penny in the past ninety days. Also, the Zacks Consensus Estimate for fiscal 2011 increased 3 cents over the past ninety days. The reason for the uptick could be the growing demand for Check Point’s security products. The Zacks Consensus Estimate for fiscal 2012 witnessed a significant jump of 8 cents since the third quarter results.

Recommendation

We remain encouraged by the steady traction of Software Blade architecture (security solution) that will likely lead to a solid fourth quarter. We believe this would drive considerable upside to the shares. However, increased competition from Juniper Networks Inc. (JNPR) and Microsoft Corp. (MSFT) are concerns.

Currently, CheckPoint has a Zacks Rank of #3 implying a short-term Hold recommendation.

Source: Check Point: Earnings Preview