The timing of Palo Alto’s announcement of a deal to acquire CyberArk coincided with Israeli company Check Point’s release of its second quarter financials. It’s unlikely that this was deliberate: Palo Alto wanted the deal to be an established fact in advance of one of the two largest cyber events in the world, Black Hat, which is taking place this week, but the combination of the two announcements led investors to penalize Check Point, sending it tumbling by no less than 15% in one session.
Since then, the share price of the company, headed by Nadav Zafrir, has risen by one percentage point, but it is traded at a market cap of $20 billion, just under that of CyberArk ($21 billion), and a long way below rival company Fortinet, which has a market cap of $74 billion, although it too has fallen fairly sharply, by 7%, in the past week.
On the face of it, it would appear that the market is punishing Check Point for the huge merger in the cyber industry, in which Palo Alto – founded by its CTO Nir Zuk, formerly of Check Point – agreed to acquire CyberArk for $25 billion, mostly in Palo Alto stock. The latter, as is well known, was founded to compete with Check Point as a company protecting enterprise networks, and expanded to become a kind of cybersecurity products supermarket in the cloud, cyber alerts management, and now identity security as well.
The assessment is, however, that Check Point’s fall was mostly nothing to do with the huge merger, but rather stemmed from the fact that the company did not raise its revenue guidance, and reported customer billings lower than forecast, and that some of them would be recognize only in the third quarter.
Will Check Point suffer from the huge Israeli cyber merger? Not necessarily. The merger is aimed at areas unconnected with Check Point’s activity, or even that of its competitors, such as Fortinet, Cisco, and privately held companies such as Shlomo Kramer’s Cato Networks. While Palo Alto Netwroks is promoting the “supermarket” approach, on the grounds that data security managers are looking for a single supplier from which to buy all the products, Check Pont, and for that matter the rest of the market, advocates an expertise approach. The companies make many acquisitions, but tend not to cross boundaries into other fields.
In remarks made at the same time as Palo Alto’s announcement of the CyberArk acquisition, Zafrir indicated that Check Point was headed in a quite different direction. Not only is it not interested in expanding into identity management, but in its view the right protection against AI threats lies elsewhere.
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While Palo Alto talks about identifying malicious AI agents and security of virtual machines (through CyberArk) as though they were human users, Check Point, like Cato Networks and other companies, sees unified cloud security, SASE (Secure Access Service Edge), as the right solution, without different products for identity management.
Unified cloud security is a kind of virtual brain that analyzes all the traffic between users and endpoint devices, and the organization’s databases and AI models. Its quality is determined by the degree of its oversight of the whole network and the way in which its rules for enforcement against wayward players – be they AI agents, virtual machines, or flesh and blood users – are formulated. With development in the right place, network control can be expanded to AI prompts, to detect whether a prompt is malicious (a prompt injection attack), and thus to render a product like that of CyberArk unnecessary.
Cato Networks developed such a network itself, and initiated the SASE rating category of market research company Gartner (despite which Palo Alto, which also has this activity, was quickly placed top of the category). Check Point is making mighty efforts to compete in this market. It bought Israeli company Perimeter 81, and this year it entered Gartner’s rankings, although it is still placed low in relation to veteran companies in this field. “We continue to accelerate our investment in SASE, we opened a new development center in India, and we doubled the size of our development team in this area,” Zafrir said last week.
Focus on four main areas
It’s important to mention that not just Check Point but also Palo Alto has fallen 15% since the middle of last week. The huge acquisition is perceived by the market as a move designed to boost the company’s growth rate, which has been below expectations so far this year, and as the acquisition of a product that is not synergetic with its other products, to consolidate Palo Alto’s status as a supermarket of products, even if they are not necessarily connected one with another.
That, as mentioned, is the opposite approach to that of companies like Check Point, Fortinet, and even Cato Networks, which remain close to the concept of network security and prevention. When Zafrir took up his post as CEO, Check Point realized that it could not specialize in a range of products, and it placed application protection on the cloud in the hands of a partnership with Wiz, at the expense of internal development through an Israeli company it bought called Dome9.
According to Zafrir, Check Point will focus on four areas, all connected to management of organizational network policy: connectivity between elements of the network; prevention of threats to the network; the joint platform concept; and AI-based protection, that is, integrating AI into the rules that the organization defines for protecting the network.
What do the analysts say?
After the release of Check Point’s financials and the report of the huge cyber acquisition deal, the market is still bullish on Check Point even if some analysts have cut their price targets. On the TipRanks analysis website, there is a majority for “Hold” for Check Point stock, the rating of fifteen analysts, while eleven recommending “Buy”, and none recommending “Sell.”
Jefferies did cut its price target for the stock from $260 to $230, but that is still 22% higher than the current price of $188.
Published by Globes, Israel business news – en.globes.co.il – on August 5, 2025.
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