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Valued at $14.4 billion by market cap Cambridge, Massachusetts-based Akamai Technologies, Inc. (AKAM) provides cloud computing, security, and content delivery services in the United States and internationally. Akamai makes it easy for businesses to develop and run applications while keeping experiences closer to users and threats farther away.
Companies worth $10 billion or more are generally described as “large-cap stock,” Akamai fits this bill perfectly. Given Akamai’s global coverage and scale in the edge delivery space, its valuation above this mark is unsurprising. Over the years, several global brands and companies have chosen Akamai to build, deliver, and secure their digital experiences.
Despite its notable strengths, Akamai has tanked over 25.2% from its 20-year high of $129.17 touched on Feb. 9. The stock has declined nearly 4.1% in the past three months, lagging behind the Dow Jones Industrials Average’s ($DOWI) 1.9% gains during the same time frame.
Akamai’s performance has remained grim over the longer term as well. AKAM has gained 8.6% in the past six months and plunged over 19.2% in the past 52 weeks, underperforming DOWI’s 9.6% gains over the past six months and 14.8% returns over the past year.
To confirm the bearish trend, AKAM has traded mostly below its 200-day moving average since early April and below its 50-day moving average since early November with some fluctuations.
Despite reported better-than-expected results, Akamai Technologies’ stock prices plummeted 14.4% in the trading session after the release of its Q3 earnings on Nov. 7 as its content delivery network revenues have continued to observe a decline and its Q4 guidance fell below Wall Street’s expectations. It reported a 15.9% year-over-year decline in Delivery revenues to $319.1 million, however, its Security and Compute segment revenues observed a substantial growth, which led to a 4.1% year-over-year growth in total revenues to over $1 billion, beating analysts’ estimates.
Meanwhile, it incurred a restructuring charge of $82 million during the quarter and observed notable increases in other operating expenses which led to a massive 59.9% year-over-year drop in operating income to $70.6 million.
Akamai has significantly underperformed its peer Cloudflare, Inc.’s (NET) 43.2% surge over the past six months and 32.3% gains over the past year.
Nevertheless, analysts remain bullish on Akamai’s long-term prospects. Among the 19 analysts covering the AKAM stock, the consensus rating is a “Moderate Buy.” Its mean price target of $114.79 represents an 18.8% premium to current price levels.
