Seeking Alpha
, Small Cap Gems (644 clicks)
Long only, contrarian, special situations, value
Profile| Send Message|
( followers)  

Check Point Software Technologies (NASDAQ:CHKP) has had a challenging six months and the stock is down more than 30% from its $65/share high hit in the second quarter. However, it is launching new products and has received a rash of positive analyst comments and rating upgrades over the last week. It is selling for a cheap valuation and looks as if it has good technical support at these levels. It might be time to start to bottom-fish this premiere provider of security solutions.

Possible catalysts for Checkpoint Software:

  • Bank of America just upgraded the stock from a "neutral" to a "buy" on valuation. It also raised its price target from $47 to $52 a share.
  • JPMorgan also raised its rating from "neutral" to "overweight" today.
  • TheStreet reiterated its buy rating on the stock yesterday.
  • Finally, Standpoint Research upgraded the shares from a "hold" to a "buy" earlier in the week.
  • It has two-year technical support at these levels (see chart below).

Click to enlarge image.

Check Point Software Technologies develops and supports a range of software and combined hardware and software products and services for information technology security worldwide.

Here are four reasons Check Point is a good value at $43 a share:

  1. The company has a robust balance sheet with nearly $1.5 billion in net cash on the books (over 15% of its market capitalization).
  2. The stock is selling near the bottom of its five-year valuation range based on P/E, P/S, P/CF, and P/B.
  3. The mean analyst price target of the 22 analysts who cover the stock is $54 a share. Credit Suisse has an "outperform" rating and a $55 price target on the stock.
  4. The company has grown earnings per share at better than a 20% annual clip over the past five years, despite the difficult economic environment. The company is going for less than 13 times forward earnings (11 times accounting for net cash).
Source: Rash Of Upgrades Means It's Time To Go Bottom-Fishing On This Beaten-Down Tech Stock