Check Point Software Technologies Inc (CHKP)

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Merrill Lynch repeats Buy and tweaks up Check Point 2006 forecasts

29.1.06 | 21:36 By Asaf Rothem
In January 2005, Check Point Software Technologies (NASDAQ: CHKP) stock was at $24. Twelve months later, the share price is down to $22.60 even though the data security company has remained a mint.

Tomorrow Check Point will be presenting its results for the fourth quarter of 2005. Merrill Lynch today repeated its analysis of two weeks ago, expecting that Check Point will at least meet the midpoint of forecasts and report $158 million revenues for the quarter.

Merrill Lynch itself expects slightly more, $160 million sales, and net earnings of 35 cents per share or $88.8 million profit.

For the year Merrill Lynch is predicting $326 million net profit and $1.26 earnings per share on revenues of $584 million.

The investment bank noted strong orders at year-end that could offset some weakness in November, it said. However, though European sales are typically high at year-end, economic weakness could moderate that effect in 2005.

For the year 2006 Merrill Lynch tweaked up its forecasts to $676 million revenues and earnings of $1.38 per share, or $350 million. That includes $40 million revenues from Sourcefire, the acquisition of which Check Point is in the process of closing. Any delay in closing could hurt revenues.

Merrill Lynch's 12-month price target remains $25, an objective it set back in July 2005, and its investment recommendation remains Buy.

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