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Lehman Brothers slashes Check Point price target from $50 to $30

Analysts lowered revenue and earnings forecasts for 2001 and 2002 but reiterated Buy recommendation

Lehman Brothers has slashed its price target for Check Point Software Technologies (Nasdaq:CHKP) from $50 to $35 after the Israeli data security provider's results warning.

Check Point pre-announced that its third-quarter revenues will reach $118 million at most, or $117 million. Beforehand it had anticipated Q3 revenues of $135 million.

Lehman analysts Tobias Fischbein and Israel Hernandez reiterated a Buy rating for the share, but add, "we would not be aggressive buyers at current levels", of $26 per share, until the Q3 situation clears up.

They expect Q3 earnings of 28 cents per share, compared with previous estimates of 39 cents per share.

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For the year 2001, they see revenues of $530 million instead of $568 million, and earnings of $1.23 per share instead of $1.32.

They also lowered their 2002 forecasts to $585 million, from $666 million, and EPS to $1.39 from $1.55.

On the upside, Fischbein and Hernandez view Check Point's multiple of 21 times expected 2001 earnings at not "terribly expensive" given the company's track record.