Jefferies & Co. said CheckPoint Software Technologies (Nasdaq: CHKP) could have a $100 million revenue upside over the next 12 months through continued appliance adoption, a hardware refresh cycle, and software blades.

The brokerage also maintained its "buy" rating on the Internet and network security provider, with a price target of $43.

"With the sale of McAfee to Intel, investors have begun to speculate on the future of the large- and mid-cap IT security stocks. Check Point shares look attractively priced. We think continued appliance adoption, a hardware refresh cycle, and software blades could drive $100 million in revenue upside over the next 12 months," said Katherine Egbert, an analyst at Jefferies.

She has analyzed three upside catalysts she believes could drive Check Point Software shares higher. Egbert said she looks at valuations for VeriSign and Symantec while digging into the fundamental drivers for Check Point Software.

Since Check Point first introduced its network security appliance in 2007, appliance sales have grown to represent 75% of total product sales. By offering appliances, Check Point benefits from hardware refresh cycles and a higher average selling price (ASP), Jefferies said in a report to clients.

The analyst estimates that about 75% of the Nokia installed base has yet to migrate to Check Point appliances. Assuming 10% uplift in ASP, this translates into about $300 million in additional revenue over the next 3.75 years, or about $80 million per year. The release of the merged IPSO/SPLAT appliance, expected in first quarter of 2011, could accelerate the Nokia migrations.

The analyst said Check Point's software blades give customers the flexibility to add more security features on to the firewall/gateway. The annuity-based blades also provide a recurring stream of revenue. The analyst estimates software blades can add $15 million to revenue in 2010 and another $60 million in 2011.

"Trading at 8.6 times of 2011 enterprise value-to-free cash flow vs. peer average of 10 times, Check Point shares remain attractive given its potential upside. We believe multiples could expand as product revenues accelerate from the adoption of both software blades and appliance refresh cycle," said Egbert.

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This article has been lightly edited. Check Point Software Technologies is a Motley Fool Rule Breakers pick. Intel and Nokia are Motley Fool Inside Value recommendations. The Fool owns shares of and has written puts on Intel. Motley Fool Options has recommended buying calls on Intel. The Motley Fool has a disclosure policy.