01:07 PM EDT, 10/30/2024 (MT Newswires) -- Check Point Software Technologies ( CHKP ) is likely to see a temporary increase in billings in Q4, but its long-term growth prospects remain limited, BofA Securities said in a report Wednesday.

Q3's main highlight was the weak billings growth of 5.8% year-over-year, below Wall Street's 8.2% expectation. While BofA anticipates a potential recovery in Q4, concerns remain about the company's overall low growth trajectory amid ongoing challenges in its go-to-market strategy and competitive landscape.

Despite investments in new products and a revamped portfolio, the outlook for achieving double-digit growth in 2025 appears increasingly challenging. BofA suggests that this would require a significant acceleration in appliance revenue growth, which seems unlikely in the current market conditions.

Check Point Software's ( CHKP ) Infinity, which now constitutes 15% of total revenue, continues to exhibit double-digit growth, providing some support for long-term growth durability.

However, management has indicated weakness in Europe, with several deals slipping into Q4. While billings are expected to rebound in the fourth quarter, modeled growth stands at 7.1%, but the broader focus remains on the slower growth outlook.

For 2025, BofA estimates maintenance revenue could see a modest acceleration from about 2% to 3.5% year-over-year, primarily driven by Infinity-related professional services.

Subscription revenue growth has started to decelerate, reaching 11.5% year over year in Q3, which is below the Street's 13% expectation. Meanwhile, product revenues recovered slightly, posting a 4.1% growth after negative performance last year, according to the note.

To achieve a target of 10% total revenue growth in 2025, product revenue growth would need to surge from 4% to around 20%. However, given the current market dynamics, BofA views this as unfeasible and instead models a modest growth of 1.6% for product revenues and a total revenue growth of 5.6% year over year in 2025.

BofA downgraded Check Point Software ( CHKP ) to neutral from buy and lowered its price objective to $195 from $205.

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