How did Check Point become the only stock not enjoying the celebration in the cyber market?

In contrast, a share Check point is lagging behind, with a negative return of 31.5% since the beginning of the year, and the financial statements published last week did not change the trend. As Cantor Bank’s cyber analyst, Jonathan Rueckhaber, defined it, “the results of the quarter were not enough to ease the concerns related to execution.”

Check Point actually exceeded the profit forecast in the second quarter, but recorded revenues lower than expected and presented a lukewarm forecast for the third quarter where it expects revenues of 655-685 million dollars and a net profit of 2.43-2.53 dollars per share. The company emphasized that the third quarter marks the bottom, and that the fourth quarter will be stronger, but it seems that the market is waiting for clearer signs of recovery.

7 billion dollars evaporated

Check Point is managed from the end of 2024 by Nadav Zafarir. When the company announced his appointment two years ago, the stock soared, and the company’s value rose above $20 billion, but since then it has weakened and is currently trading at a value of $13.1 billion. In the previous quarter, Check Point revised down the annual revenue forecast (which remains unchanged now) due to changes in its sales organization (go-to-market), and these changes also negatively affected the results of the second quarter.

Analyst Joseph Gallo of Jefferies wrote before the latest reports that these changes led to a “yellow card” from the market for Check Point, and it will try to avoid a “red card” by placing orders in line with the consensus. After the reports, Gallo wrote that it did happen, but added that the company continues to experience pressure from the changes in the sales organization. In his estimation, the delay in the recovery to the fourth quarter increases the risks of execution.

Looking forward to the next quarter

Speaking to reporters on Thursday, Zafir referred to market expectations and Check Point’s conservatism in making acquisitions over the years, an approach that has not changed even under his management, perhaps contrary to market expectations. Tzafir said that “I understand that there is an expectation of big and shiny moves in a short time. We have our direction, and acquisitions as acquisitions are not the company’s goal – we will continue to work according to vision and strategy. We are not resting on our laurels.”

According to him, Check Point is recruiting hundreds of new sales representatives all over the world, including in Israel. “We are stabilizing the system,” he said of the sales organization. Zafir also added that “we are optimistic about the second half and especially the fourth quarter. In the future, the new products and the double-digit increase in the sales force will have an effect from 2027.”