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Analysts Weigh in On Akamai Technologies (AKAM), Make a Number of Changes to Estimates

February 9, 2012 11:41 AM EST Send to a Friend
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Price: $59.44 -0.45%

Rating Summary:
    23 Buy, 9 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 35 | Down: 23 | New: 13
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Shares of Akamai Technologies, Inc. (NASDAQ: AKAM) are trading up 10.89 percent today after reporting its fourth quarter results. For the fourth quarter, earnings came to $0.45 per share, $0.05 better than the analyst estimate of $0.40. Revenue for the quarter came in at $324 million versus the consensus estimate of $311.26 million.

The company also announced a planned transition in leadership within the Company's finance organization. James Benson, Akamai's Senior Vice President of Finance will succeed J. Donald Sherman as Executive Vice President and Chief Financial Officer, effective March 1st.

During the company’s quarterly conference call, management noted the company is expecting first quarter sales of $305-$313 million and adj-EPS of 36-39 cents. The Street is currently expecting sales of $304.82 million and earnings of $0.39 for the quarter.

Analyst comments

“Management remained confident in their ability to hit the 46% margin target and stressed that Q1 would primarily be impacted by new product investments and seasonal declines vs. Q4,” comments an analyst at Wells Fargo. “We think AKAM margin targets are likely conservative and note that gross profit margins improved sequentially for AKAM in Q4 2011 for the first time since Q1 2010.”

Following the release, Wells Fargo reaffirmed its Outperform rating on the company and raised its price valuation range from $39-$41 to $45-$49.

An analyst at Collins Stewart reports, “Despite the CDN headwinds created by some of the larger telco competitors in the market , Akamai managed to buck the trend of slowing annual revenue growth”….“We note that the stregnth was driven by better than expected growth rates from both the Cloud Infrastructure segment as well as the contend delivery business.”

Although Collins Stewart believes the acquisition of Cotendo Inc. represent an unambiguous positive for the company, the firm is maintaining its Neutral rating on the stock. Collins has also raised its price target on the company from $31 to $34.

While reiterating it’s Buy rating and raising its price target from $36 to $43 on the company, an analyst at Dougherty & Co. states, “We believe the Q4 results are consistent with our thesis that AKAM is a uniquely positioned Internet Infrastructure provider, benefiting from Internet growth, generating a significant amount of cash, with several large growth vectors available to it.”

DA Davidson notes the first quarter will be the hardest quarter for the company to boost growth throughout the year. The company was worried about the guidance ahead of the release, but has become less skeptic following the solid outlook given by management.

DA Davidson remains Neutral on the stock, while raising its price target from $36 to $40.

Credit Agricole has upgraded its rating on the company’s stock from Outperform to Buy. The firm also raising its price target on the company from $37 to $44.




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Analyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change

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D.A. Davidson, Collins Stewart, Credit Agricole, Earnings, Wells Fargo

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