Check Point Software ( CHKP) was rising and carrying some peers higher Monday after a brokerage said the company is doing better than expected and could see its valuation swell.

Shares of the Redwood City, Calif., security software firm were recently up $1.48, or 8%, to $20.32 after Lehman raised its investment rating to overweight from equal weight and upped the price target to $25 from $18. Rival Symantec ( SYMC) was up $1.85, or 4%, to $47.07, while Verisign ( VRSN) was adding 46 cents, or 3%, to $14.52; Internet Security ( ISSX) was up 46 cents, or 3%, to $15.03; and RSA Security ( RSAS) was up 11 cents, or 1%, to $10.25.

Lehman said an investigation of Check Point's distribution channel suggests the company will be able to beat estimates in the second quarter. The consensus currently calls for earnings of 24 cents a share on revenue of $106 million, according to Thomson First Call.

"Firewall/virtual private network strength has been notable in the NetScreen channel for several quarters but this is the first time in a long time the Check Point channel appears more positive," Lehman wrote. "Part of this positive vibe is the fact that this is the last quarter that Check Point will support older versions of its fire wall and VPN solutions. This appears to be creating a last-minute upgrade cycle to Next Generation, Check Point's core security platform."

The brokerage said the shares could see a higher price/earnings ratio before the year's out.

"Our view is that Check Point's valuation will converge over the next 12 months toward the mid to high end of the comparable group as growth begins to accelerate," Lehman said, noting the stock trades at about 19 times expected 2003 earnings compared to an average of around 25 for the security software group. "We believe the changing sentiment stemming from improved financial performance and growing awareness of Check Point's Application Intelligence initiative should drive multiple expansion over the next year."

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