On Monday, Piper Sandler, a financial services firm, increased its price target on Checkpoint Software (ETR:SOWGn) (NASDAQ:CHKP) shares to $195 from the previous target of $185. The firm's analysts have decided to maintain a Neutral rating on the stock.
The adjustment in the price target reflects a change in the terminal enterprise value/free cash flow (EV/FCF) multiple, which has been influenced by the rising valuations of Checkpoint's peer group.
The analysts at Piper Sandler noted that the appointment of a new CEO at Checkpoint holds promise for the year 2025, but it remains uncertain what strategic changes the new leadership will implement.
They also mentioned that while a firewall cycle is expected to benefit Checkpoint's financial results, Fortinet (NASDAQ:FTNT) might be a more straightforward investment choice to take advantage of this trend.
Piper Sandler's base case discounted cash flow (DCF) analysis assumes a compound annual growth rate (CAGR) of 4.7% for Checkpoint's revenue through the calendar year 2029. The firm also anticipates a free cash flow margin of 45.2% by the end of the same period.
Furthermore, the analysts have adjusted the terminal EV/FCF multiple to 14 times, up from the previous 13 times, with a discount rate of 11% and fully diluted shares outstanding projected to be 113 million.
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