Times are tough in the data security market and no rally is in sight, according to most investment houses. Going by an analysis of Israeli flagship company Check Point Software Technologies (Nasdaq:CHKP), released yesterday, the company's sales in April were strong, but business isn't as usual come May. Check Point stock fell 7.6% on Wall Street yesterday to a company value of $4.2 billion.

But there are five weeks until the second quarter ends, the UBS Warburg analysts - Jordan Klein, Jonathan Half, Gregg Moskowitz - point out. It is too soon to say whether Check Point will finish below expectations. But certain parameters must improve compared with early May if the company is to meet forecasts of 5% to 10% growth in the second quarter, they write.

The analysts have not changed their forecasts, which are below the company's of second quarter revenues of $110 million to $115 million. UBS predicts $108 million. But they won't be surprised if Check Point falls short, they write.

After a meeting with Check Point chief executive and chairman Gil Shwed, they also phoned CFO Eyal Desheh, and concluded that Check Point's chiefs do not see June bringing a significant improvement.

For the first quarter Check Point issued an acute profit warning, even though just the week before it had shown faith in its forecasts. As Desheh said at the time, "Traditionally, we sell 30% in the first month of the quarter, 30% in the second and 40% in the third¿ so that at mid-month we still couldn't see the whole picture clearly. These days many deals do not translate into revenues, mainly in our main market of large organizations, as companies are hesitant to make investments."

The question is when this trend will end. It might soon, UBS' analysts feel. Corporate spending on data security may start to pick up again in the third quarter, if the macro-economic picture really does improve starting towards the end of the second quarter. In such case Check Point might return to trading around $25 per share.

The analysts set Check Point a target price of $27, based on a multiple of 24 times estimated 2003 sales, assuming a profit per share of $1.14.

Meanwhile, Goldman Sachs yesterday lowered its forecasts for Check Point to annual revenues of $445 million, compared with UBS' forecast of $450 million. The company anticipates annual income of $470 million to $480 million.

Goldman Sachs expects annual profit per share of $1.03, a shave down from an earlier estimate of $1.03 per share.