RESEARCHCHKP.TAabout 1 month ago13.2Kviews

Check Point: nothing wrong with it except the price

The franchise is durable and the execution has been clean. At this multiple you are underwriting three flawless years, and I would rather own it materially lower.

Tomer Avraham@tomer_avraham

The mechanism is duration. A multiple is a claim on a terminal growth rate, and at these levels the implied duration is longer than any enterprise software franchise has historically sustained without a re-rating. The comparison is the evidence. Peers with similar growth and margin profiles trade materially lower, and the gap has widened rather than narrowed over the last two quarters without a corresponding change in fundamentals. The position: no call. This is a name I want to own and not at this level, so there is nothing locked here and nothing for the record to grade. If the entry improves I will say so in a piece that does carry a call. The risk is that the migration stalls with the mix half-shifted. A stalled transition holds the blended margin at the worst point of the curve, and there is no obvious catalyst to restart it.

Discussion · 6

Noa BergmanAUG 15

Not convinced, but well argued. The elasticity decay across the price actions is the tell. Does the same logic apply to the closest comparable?

Marco BianchiAUG 14

Respectfully, I think this overstates it. The contract structure matters more than the headline rate. Has anything in the last print changed the entry you would take?

Ines FerreiraAUG 13

I think the setup matters more than the thesis here. The regulatory ceiling being quantified changes the model, not just the headline. Where does this break if rates back up another 50bp?

Marco BianchiAUG 13

Been long since the last one. The mix argument is the part I had not considered properly. Curious whether you would still size it the same at a higher entry.

Tomer AvrahamAuthorAUG 14

Fair challenge. Invalidation is a close below the lock price on volume, and I should have written that into the card rather than leaving it implicit. (836)

Noa BergmanAUG 13

Not convinced, but well argued. Second source in a constrained market is genuinely underrated. What does the bear actually have to be right about?