Piper Jaffray Maintains a 'Neutral' on Akamai Technologies (AKAM); Raises Price Target on Stronger Spending Outlook

December 3, 2009 7:10 AM EST

Piper Jaffray & Co. maintains a 'Neutral' on Akamai Technologies (Nasdaq: AKAM), raises price target from $24 to $26.

Piper analyst says, "We recently spoke with 36 top-tier Akamai customers at an industry event. 78% of customers indicated they will spend more with Autodesk (Nasdaq: ADSK) in CY10 vs. CY09 and only 6% expect spending to decline. Existing customers intend to shift their CDN business increasingly towards Akamai and away from competitors in CY10, indicating Akamai has room to gain additional market share within the core customer base...Bottom line: Survey of Akamai's loyal customers shows solid spending intentions into CY10 and potential for share gains within the existing base. Raising price target to $26 based on 5 yr avg multiple of 24x NTM EPS."

"Akamai is seeing per unit pricing declines offset by increased total volume; the net result has been consistent y/y revenue growth. Our survey indicates that volume increases will continue to offset per unit pricing declines into CY10. Specifically, top-tier customers expect per unit pricing to decrease by 10.5% in CY10 vs CY09. We see this as a positive, as we are expecting pricing declines of 20-30% y/y in CY10. Also, of those we surveyed, 28% indicated pricing will remain constant in CY10 vs. CY09, implying contract pricing will hold through CY10, also a surprising find within our survey data."

Akamai Technologies, Inc. provides services for accelerating and improving the delivery of content and applications over the Internet.

To see all the upgrades/downgrades on shares of AKAM, visit our Analyst Ratings page.

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