Morningstar | Check Point's Security Platform Strategy Enticing for Hybrid-Cloud Networks; Raising FVE to $120. See Updated Analyst Note from 20 Dec 2018
Narrow-moat Check Point, essentially a software firm, deeply entrenched its firewall technology within enterprise networks and has expanded into nascent security protection trends that offer business-wide solutions. Data proliferation, cloud-based networking, increased SaaS application usage, and a growing quantity of mobile endpoints have complicated cybersecurity and placed network security at the forefront of IT teams' concerns. We are proponents of Check Point's consolidated security architecture and expect high demand for its subscription-based products, leading us to increase our fair value estimate to $120 per share from $116. Now in 4-star territory, cybersecurity pureplay Check Point presents an attractive investment opportunity.Cybersecurity threats are now multiple vector attacks, attempting to penetrate network vulnerabilities, and the malicious actors can be professionally trained, state-sponsored teams. Historically, enterprises purchased security point solutions to combat the latest threats and had to manage various software and hardware vendors' products simultaneously. Changing the cybersecurity mindset in a hybrid-cloud world, Check Point's Infinity architecture consolidates various security products into a single management plane that deploys the latest updates and threat intelligence across all attack vectors.
With a vast customer base of over 100,000 businesses and renowned product leadership for existing threat technology, we believe Check Point's consolidated security architecture provides ample upsell and cross-selling opportunities as enterprises increase their reliance on cloud-based products and mobile networking. Although we expect more competitors within cloud-based security due to the low entry barrier for making SaaS products, we posit a large advantage for Check Point is its ability to position itself as the commonality between on-premises, cloud, and mobile security as enterprises expand their networks.
Future Check Point products will only be sold as a subscription-based model and we believe this could further ingrain Check Point with businesses that favor predictable operating expenditures. Its subscription-based Infinity Total Protection architecture offers all of Check Point's products on an annual, pay per user basis. This concept may help permeate Check Point's product throughout an organization, since there are no additional costs for using more products, which then creates higher switching costs and better customer retention, in our view.
Check Point Software Technologies develops, markets and supports a range of products and services for IT security. Co. offers its customers a portfolio of network security, endpoint security, data security and management solutions. Co.'s solutions operate under a unified security architecture that enables end-to-end security with a single line of unified security gateways, and allow a single agent for all endpoint security that can be managed from a single unified management console. This unified management allows for ease of deployment and centralized control and is supported by, and reinforced with, real-time security updates.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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