Israeli cybersecurity company Check Point Software Technologies Ltd. (Nasdaq: CHKP) plunged on Wall Street during the night after publishing its third quarter results. The company had beaten the analysts' expectations but then blotted its copybook by providing disappointing fourth quarter guidance below the analysts' forecasts.
Check Point sees fourth quarter revenue of $485-525 million, while the analysts had been predicting $530 million. The Israeli company sees fourth quarter non-GAAP earnings per share of $1.45-1.55, in line with the analysts' prediction of $1.49.
The guidance sent shockwaves through the market. Check Point's share fell 12.5% to $103.01, giving a market cap of $16.84 billion. Over the past year, Check Point's share had risen by 42%, giving it a market cap of nearly $20 billion, and in the process surpassing troubled Teva to become Israel's most valuable company.
On the basis of the latest guidance, Check Point will end 2017 with revenue growth of about 5.5% at $1.83-1.87 billion, below the original forecast of $1.85-1.9 billion. Non-GAAP net profit will amount to $5.21-5.31 per share compared with $4.72 in 2016.
Deutsche Bank analysts Melissa Dunn and Karl Keirstead wrote, "Check Point published a disappointing fourth quarter report with a slowdown in growth of revenue from products and licenses to 6%, compared with 10-13% in previous quarters due to weakness in the US. Dunn and Keirstead give credit to Check Point for persistently maintaining a stable performance and claim it is unreasonable that suddenly they are deemed to have failed. The reason they find for the negative sentiment is a slowdown in demand for firewall.
Credit Suisse speculates that there may be a change in trend in the market with the growing adoption of cloud computing.
Check Point is led by founder and CEO Gil Shwed.
Published by Globes [online], Israel business news - www.globes-online.com - on November 2, 2017
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