Akamai (AKAM) Has Size, Scale, Technology for Continued Growth - Barron's
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Akamai Technologies (Nasdaq: AKAM) recently saw its stock pop after acquiring competitor Contendo in a $268 million cash deal, and Barron's thinks there still might be some more in the tank moving forward.
Barron's mulls why Akamai is such a love/hate story on Wall Street. Shares were over $50 in January, but had plunged below $19 to start October. Currently at $32 per share, the publication thinks shares will do the same pattern all over again.
All of the volatility seems fairly ridiculous for a company that has contact with about 30 percent of the Internet, according to Barron's. Having over 100,000 servers in 71 countries, Barron's notes "[e]very big media company and 90 of the 100 largest online retailers use Akamai to keep their content flowing quickly and reliably." That's pretty big.
Akamai also continues to innovate: it's cloud serving as a defense against cyber attacks, all while data is rerouted to the most efficient and quickest path.
What about partnerships? Akamai recently entered agreements with Ericsson (Nasdaq: ERIC) and Riverbed Technology (Nasdaq: RVBD) to bring its software into private enterprise clouds and wireless networks.
Akamai's cloud currently accounts for 60 percent of overall revenue and could grow from $1.15 billion expected in fiscal 2011 to a record $1.3 billion in 2012.
Bears argue competition is fierce, and Akamai might have a hard time meeting pricing pressure from rivals like Level 3 (Nasdaq: LVLT) and Limelight Networks (Nasdaq: LLNW). However, Barron's notes Akamai has the size and scale to appeal to larger clients looking for speed, reliability, and capability.
With the Street's price target average at about $31, sell-side analysts may be giving Akamai the benefit of the doubt, and the opportunity to profit might be missed once Wall Street catches up.
Shares are about 2 percent better on the session.
Barron's mulls why Akamai is such a love/hate story on Wall Street. Shares were over $50 in January, but had plunged below $19 to start October. Currently at $32 per share, the publication thinks shares will do the same pattern all over again.
All of the volatility seems fairly ridiculous for a company that has contact with about 30 percent of the Internet, according to Barron's. Having over 100,000 servers in 71 countries, Barron's notes "[e]very big media company and 90 of the 100 largest online retailers use Akamai to keep their content flowing quickly and reliably." That's pretty big.
Akamai also continues to innovate: it's cloud serving as a defense against cyber attacks, all while data is rerouted to the most efficient and quickest path.
What about partnerships? Akamai recently entered agreements with Ericsson (Nasdaq: ERIC) and Riverbed Technology (Nasdaq: RVBD) to bring its software into private enterprise clouds and wireless networks.
Akamai's cloud currently accounts for 60 percent of overall revenue and could grow from $1.15 billion expected in fiscal 2011 to a record $1.3 billion in 2012.
Bears argue competition is fierce, and Akamai might have a hard time meeting pricing pressure from rivals like Level 3 (Nasdaq: LVLT) and Limelight Networks (Nasdaq: LLNW). However, Barron's notes Akamai has the size and scale to appeal to larger clients looking for speed, reliability, and capability.
With the Street's price target average at about $31, sell-side analysts may be giving Akamai the benefit of the doubt, and the opportunity to profit might be missed once Wall Street catches up.
Shares are about 2 percent better on the session.
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