Check Point showed record results in the third quarter, but compared with similar Internet-security companies, it is priced high, Gershon says.
But she says that Check Point, which trades at a market cap of $25 billion, is considered the market leader. She therefore sets its future price/earnings ratio at a range of 110 to 115, and accordingly boosted her 12-month target by $36 to $196.
Her new target is just 16% above the company's current price, hence her downgrade. Gershon calculates that Check Point will record sales of $417 million in 2000, 90% more than in 1999 and estimates that the company will net $204.5 million, and report earnings of $1.17 a share this year.
The company's rate of growth will slow a bit in 2001, she believes, resulting in annual sales of $651 million, up 56% from 2000. The company will net $312.2 million in 2001 and earn $1.75 a share.
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