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Based in Cambridge, Massachusetts, Akamai Technologies, Inc. (AKAM) is a global leader in content delivery network and cloud infrastructure services valued at $15.3 billion by market cap. Akamai’s solutions mitigate traffic congestion, bandwidth issues, and capacity constraints, allowing secure, scalable, and cost-effective e-business operations. The company is organized into two main divisions: Media and Carrier and Web Division.
Shares of AKAM have underperformed the broader market over the past year. The stock has soared marginally over this time frame, while the broader S&P 500 Index ($SPX) has surged 28.3%. In 2024, AKAM fell 14.1%, lagging SPX's 17.6% gains on a YTD basis.
Zooming in further, AKAM has also trailed behind the Cloud Computing ETF FT (SKYY), which has gained about 29% over the past year. Moreover, the ETF’s 11.3% returns on a YTD basis outshine AKAM’s double-digit losses.
On Aug. 8, Akamai Technologies announced its Q2 earnings and the stock popped up 10.9% during the subsequent trading session. The company exceeded both top-line and bottom-line market expectations and projected full-year non-GAAP earnings between $6.34 and $6.47 per share, with revenue estimated to be between $3.97 billion and $4.01 billion.
For the current fiscal year, ending in December, analysts expect Akamai Technologies’ EPS to decline marginally year over year to $4.41 on a diluted basis. However, the company's earnings surprise history is disappointing. It met the consensus estimate in only one of the last four quarters and missed on three other occasions.
Among the 20 analysts covering AKAM stock, the overall consensus rating is a “Moderate Buy.” That’s based on 13 “Strong Buy” ratings, one “Moderate Buy,” five “Holds,” and one “Strong Sell.”
This configuration is slightly more bullish than a month before, with 11 analysts suggesting a "Strong Buy."
On Aug. 9, Craig-Hallum upgraded Akamai Technologies to “Buy” from “Hold” and also raised the price target to $125 from $110. The analyst expects top-line growth to bottom in Q3 and accelerate into mid to upper single digits in fiscal year 2025, with improving non-GAAP operating margins due to a shift toward higher-growth businesses.
The mean price target of $116.17 represents a 14.3% premium from AKAM’s current price levels. The Street-high price target of $140 suggests an impressive upside potential of 37.7%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
