On Monday, we started a series on the options of stocks in the cybersecurity industry. We examined options of Cisco Systems on Monday and we examined the options of Symantec Technologies yesterday. Today, we will examine the options of Check Point Software Technologies Ltd. (NASDAQ:CHKP) today.
Check Point Technologies with its market capitalization of $14.11B develops, markets and supports a range of products and services for IT security. The products and services are sold to enterprises, service providers, small and medium sized businesses and consumers. The Company offers its customers a portfolio of network and gateway security solutions, data and endpoint security solutions and management solutions.
Why We Are Looking At Check Point Today
The name Check Point might not easily ring a bell considering the fact that the company operates from Israel. However, Check Point is a force to reckon with in the IT security solutions market as it controls a significant market share. In fact, Check Point is the largest pure-play security vendor globally.
Check Point controls a 12.8% market share in the IT security sector to take second place behind Cisco System’s 17.5% market share. Hence, Check Point is strategically positioned to take a huge chunk out of the market because of its innovative security solutions.
Reasons to be Optimistic about Check Point
Impressive Financials and Chart Pattern
I am impressed by the quality of Check Point’s financials as the company continues to record growth in its top and bottom lines. In the third quarter, Check Point reported third quarter EPS of $0.93 to beat the consensus analysts’ estimate of $0.91. The company’s revenue came in at $370M to mark a 7.6% year-over-year improvement and to beat the consensus estimate of $367M.
In line with the impressive financials, Check Point reported fourth quarter total revenue of $421 million to beat the consensus estimate of $416.1M and to represent a 9% year-over-year increase. The company’s fourth quarter EPS came in at $1.07 to beat the consensus estimate of $1.05 and to represent a 10% year-over-year increase.
Going forward, Check Point expects first quarter revenue guidance of $360 million to $375 million versus analyst estimates of $368.4 million. The company also expects on-GAAP EPS guidance of $0.89 to $0.93 versus analyst estimates of $0.93.
From the foregoing, you will observe that Check Point has been consistent in its growth trajectory in the last four quarters. Hence, we can reasonably expect the stock to soar higher in the coming quarters.
Innovative Security Solutions
Another reason to be optimistic about the prospects of Check Point is the quality of its innovative solutions for IT security needs. The company recently launched its ThreatCloud IntelliStore, a threat intelligence marketplace enabling enterprises to choose from different customized threat neutralizing solutions. In addition, Check Point has collaborated with iSIGHT Partners, CrowdStrike, IID, NetClean, PhishLabs, SenseCy and ThreatGRI for the offering of its ThreatCloud Intellistore.
In addition, Check Point recently announced the release of new 600 Appliances that will help small businesses implement comprehensive security check to ensure the protection of data at all times. The new 600 Appliances is designed to deliver powerful Fortune 100 security to protect small businesses against the latest cyber-attacks, including viruses, spam, malicious Websites, among others. The 600 Appliances provide an affordable, all-in-one security solution with market leading performance of 1.5 Gbps of firewall throughput and 37 SecurityPower units.
How to Trade CHKP Options
I strongly believe that Check Point will continue to deliver outperformance in the following quarters as consumers and enterprise needs for cybersecurity continues to rise. I recommend that you buy CHKP call options. The CHKP Apr 2015 75.000 call (CHKP150417C00075000) at an asking price of $3.65.
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