Bloomberg News

Palo Alto Cybersecurity View Lifts Check Point: Israel Overnight

September 11, 2013

Check Point Software Technologies Ltd., the world’s second-largest maker of network security gear, posted the biggest gain in almost two months after Palo Alto Networks Inc.’s revenue outlook beat estimates.

Shares of the Tel Aviv-based company climbed 2.7 percent to $58.45. The Bloomberg Israel-US Equity Index of the most traded Israeli equities in New York added 1.6 percent. Allot Communications Ltd. (ALLT:US), the Israeli maker of technology used to track wireless traffic, led gains on the gauge. Mellanox Technologies Ltd. (MLNX:US), which makes equipment that speeds electronic data transfers, settled at a 2.7 percent discount to the Tel Aviv-listed shares, the widest gap on the index.

Palo Alto, co-founded in 2005 by a former Check Point executive, posted a 49 percent jump in sales for the three months ended July, and said revenue in the current quarter will grow (PANW:US) to as much as $120 million. Both numbers surpassed the average analyst estimate compiled by Bloomberg. Demand for cybersecurity has soared following a security breach of the U.S. Federal Reserve website in February and attacks against Bank of America Corp., JPMorgan Chase & Co. and other institutions since last September.

“Palo Alto is a great barometer for overall cybersecurity spending and the company delivered solid results,” Daniel Ives, the managing director at FBR Capital Markets & Co. in New York, said by e-mail yesterday. “Check Point is a leader in the security market and will directly benefit from healthy deal flow in the field.”

Computer Attacks

The benchmark TA-25 Index (TA-25) slipped 0.1 percent to 1,196.84 at 9:56 a.m. in Tel Aviv. The Bloomberg Israel-US gauge rose to 97.43 yesterday, the most in two months. Allot increased 6.4 percent to $13 with trading volume four times the average daily level over the past three months, data compiled by Bloomberg show.

Cybersecurity continues to be one of the fastest-growing areas of technology spending amid recent high-profile cyber-attacks, Bloomberg Industries analysts said in a report yesterday. The U.S. is planning for a possible wave of computer attacks against companies by hackers connected to Syria or Iran, a person familiar with the plan said Aug. 29.

Revenue at Palo Alto surged to $112.4 million (PANW:US) in the fiscal fourth quarter ended July 31, surpassing a $108.9 million average estimate of 24 analysts compiled by Bloomberg. The company forecast sales for the current quarter to be between $118 million and $122 million, compared with a mean analysis estimate of $118.8 million.

New Solutions

“We expect our customer growth trend to continue,” Mark D. McLaughlin, chief executive officer and president of the company, said on a Sept. 9 conference call. “In 2013, we rapidly took share in our large $12 billion addressable market. I’m proud of the results. We have grown at such significant rates and expect to continue to do so.”

Palo Alto’s quarter “was pristine and strength was broad based,” Shaul Eyal, an analyst at Oppenheimer Holdings Inc. in New York, said by e-mail yesterday. Check Point is “a beneficiary and should be seeing similar trends in the security marketplace.”

Companies are implementing new security solutions to protect data and intellectual property, Bloomberg analyst Anurag Rana wrote in a report yesterday. Software vendors such as Cisco Systems Inc. and International Business Machines Corp. (IBM:US) are pursuing acquisitions to enhance security offerings and capitalize on this trend.

Check Point’s adjusted earnings will grow (CHKP:US) 15 percent this year, from an 11 percent increase in 2012, according to the mean estimate of 28 analysts compiled by Bloomberg. The stock has surged 23 percent this year after sliding 9.3 percent last year.

Palo Alto (PANW:US)’s results speak to the tailwinds cybersecurity vendors are seeing given the increased threat environment,” Ives said.

SodaStream International Ltd. (SODA:US), the Israeli maker of home soda machines, climbed 4.3 percent to a two-week high of $64.59 in New York, as trading volume exceeded the daily average by 80 percent, data compiled by Bloomberg show. Mellanox rose 0.9 percent to $38.34, gaining for the first time in three days.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net


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Companies Mentioned

  • ALLT
    (Allot Communications Ltd)
    • $13.09 USD
    • 0.47
    • 3.59%
  • MLNX
    (Mellanox Technologies Ltd)
    • $34.54 USD
    • 0.08
    • 0.23%
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