FBR Capital Upgrades Akamai Technologies (AKAM) to Market Perform
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FBR Capital upgraded Akamai Technologies (NASDAQ: AKAM) from Underperform to Market Perform with a price target of $55.00.
Analyst David Dixon commented, "A surprising surge in the Performance and Securities Solutions segment more than offset an expected moderating decline in the Media Delivery Solutions business after tough comparables. Revenue contribution from the six largest customers slowed to approximately 10.0% of total, compared to 10.7% in 2Q. While management continued to believe that no customers aside from the top six have the scale to take CDN in-house (or via other platforms), it acknowledged expectation for further revenue loss in this segment. Management confidence of a reacceleration in revenues in 2017 is encouraging, driven by continued momentum in the Performance and Cloud securities businesses, which have been growing at a consistent double-digit pace. Although the impact from the large DIY customers should wane as their revenue contribution declines over time, we continue to see risk to high-margin CDN and Performance and Security revenues due to a network topology shift toward distributed computing that is under way, which could complicate AKAM's successful transition to a securities company. However, this trend is not playing out as quickly as expected. We raise our rating to Market Perform and our price target to $55."
Shares of Akamai Technologies closed at $59.07 yesterday.
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