Collins Stewart Cuts Price Target Akamai Technologies (AKAM), Pricing Pressure Remains Heavy

Collins Stewart is maintaining its Hold rating on shares of Akamai Technologies (NASDAQ: AKAM) while it lowers its price target from $45 to $39.

Recent market checks indicate that it has been difficult for the company to maintain its price premium. The firm believes that this will continue as competition remains very tight within the industry.

Currently alternative offering from smaller CDNs at large discounts appear to be gaining traction in the market and if this trend continues, the firm believes that AKAM will not be able to sustain its 20 plus percent revenue growth.

An analyst at Collins Stewart comments, "as the company continues expanding its network to meet demand and defend its leadership position, we believe co-location fees, network depreciation and software amortization will likely out pace its revenue growth. Accordingly, we believe gross margins will continue to be pressured."

The firm lowered its 2011 and 2012 EPS estimates from $1.57 and $1.78 to $1.55 and $1.74.

For more ratings news on Akamai Technologies click here and for the rating history of Akamai Technologies click here.

Shares of Akamai Technologies closed at $30.95 yesterday.

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