Barclays believes that the Check Point Software Technologies Ltd. (Nasdaq: CHKP) share price will find it difficult to achieve outperformance in 2016. Barclays lowered its target price for the Check Point share from $91 to $83, although the new target price is still 6.7% higher than the current market price.
Check Point, which provides Internet and information security solutions, has a current market cap of $14.1 billion. Barclays says that the company began losing market share in 2014, and that the anticipated 2016 spending environment is likely to prevent the company from expanding its multiples.
The bank qualifies its evaluation, however, writing, "We clearly view the stock as inexpensive with impressive ROIC numbers, which is why we emphasize this is a relative UW rating and not an absolute short call."
Barclays notes that according to IDC data, Check Point's Internet security market share declined from 14.9% to 14.4% in 2014, adding "While this is not a big change and Check Point remains twice larger as its next competitor, we think the slight decline is noteworthy."
Barclays predicts 7% growth in spending on security in 2016-2017, and 8.5% growth in spending on Internet security, compared with 12% growth in 2015. The bank also says that the company's market share in areas of operation that are not part of its core business is also not expected to grow significantly.
Published by Globes [online], Israel business news - www.globes-online.com - on January 7, 2016
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