Check Point Software (CHKP) Message Board

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Technology Stocks : Check Point Software (CHKP)

CHKP 189.97

-1.4%

3:59 PM EST

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To: P.M.Freedman who wrote (4130)	6/6/1999 10:54:00 AM
From: Logain Ablar	Read Replies (2) of 7150

Hi Peter & Thread: Some fundamental comments. On the year end conference call Gil indicated 30% to 35% growth for this year (couldn't remember if it was revenue or earnings) with a flat first quarter due to the first quarter being the weak quarter for the sector. First quarter was anything but flat. Especially in light of how competition was self-destructing. We now hear from the analysts through May CHKP is 20% over its internal plan. If we are to assume 30% earnings growth 1999 earnings will be around $2.35 and if earnings are now 20% ahead of internal plan we are @ $2.46. We need to be careful and cautious with this due to increases in sales, marketing and research expenses. CHKP doesn't command an earnings multiple consistent with its growth. This is due to many factors including the pattern of its quarterly earnings and management's conservative guidance to analysts. So I don't expect a 30X multiple for this years EPS although it is possible. If CHKP shows its capable of earning $2.35 to $2.46 and the economy / market stays at this level what can we expect. In the short term we can anticipate another upward revenue and earnings surprise for the second quarter. How much is anyone's guess. Without knowing the variables of CHKP's internal plan my guess will be 30% over last years 2nd quarter earnings of $19,179 or $24.9M / 40.3M share is 62 cents. This seems too high and I'm sure I'm missing something (my greed affliction is rising again <gg>). But it gives an indication the 50 cents is too low. We'll I'll be out for a few days and we always have to worry about Gil on the conference call indicating the next quarter will be flat but at least this quarter is on track. The next post illustrates CHKP's financials. Tim PS - The technicals look great.

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