Q3 Preview: Akamai (AKAM) Looks to Online Video to Bolster Strong Earnings
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Akamai Technologies Inc. (Nasdaq: AKAM) is trading higher ahead of the company's third quarter earnings report, scheduled for after the market closes today. Shares are up 1.4% in afternoon trading.
Akamai is expected to report an EPS of $0.34 on revs of $249.72 million. Last quarter, AKAM posted an EPS of $0.34 (adjusted) on revs of $245.3 million, just about even with the consensus. Last year, for Q309, the company had an EPS of $0.38 on revs of $206.5 million, beating expectations.
Shares of Akamai gained 24.4% through the quarter, to $50.18 at the end of September. The stock is down just 1.2% since the end of the quarter, and up about 91% since the onset of 2010.
Shares look pretty cheap at a forward EPS of 31x FY11 EPS estimates compared to a staggering 342x for Limelight Networks (Nasdaq: LLNW).
Data from Bloomberg has 7 analysts with a Buy rating on IBM, 14 with a Hold, and one suggesting to Sell. The analyst price target average is $47, with a high of $60 and a low of $35.
Analyst Ratings Through the Quarter
In July, Craig-Hallum downgraded the shares from Buy to Accumulate, increasing their price target from $40 to $48.
August saw Goldman Sachs upgrade shares from Neutral to Buy, noting an attractive entry point following a pullback in the shares.
In September, Wedbush kept their Outperform rating on the shares, but increased their price target from $51 to $56.
Summary
Goldman Sachs expects AKAM to report EPS and revs above expectations for the third quarter. Their Media & Entertainment segment will continue to benefit from online video consumption. They note that "[they] have already seen some evidence of cable/satellite/telco video subscribers switching to over-the-top video, and this trend is likely to gain strength as consumers consume more video online. Netflix’s latest streaming subscriber data also shows the accelerating growth in online video consumption." Value-added service revs should remain strong and keep margins stable. Goldman is looking for an EPS of $0.28 on revs of $253.9 million.
Wedbush sees page views increasing about 6% sequentially, just below their previous estimate of 9%, but enough to add an additional $1 million to revs. Strong traffic volumes should also be driven by bigger sporting events through the quarter (World Cup, Wimbledon). Wedbush expects Q310 video viewing sessions to increase by 4% sequentially. More moderate price declines are expected as well, easing pressure on margins. Wedbush is looking for an EPS of $0.35 on revs of $252 million.
Akamai Technologies Inc. is expected to release their Q310 earnings on Tuesday, October 27, 2010, at approximately 4:00pm EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
Akamai is expected to report an EPS of $0.34 on revs of $249.72 million. Last quarter, AKAM posted an EPS of $0.34 (adjusted) on revs of $245.3 million, just about even with the consensus. Last year, for Q309, the company had an EPS of $0.38 on revs of $206.5 million, beating expectations.
Shares of Akamai gained 24.4% through the quarter, to $50.18 at the end of September. The stock is down just 1.2% since the end of the quarter, and up about 91% since the onset of 2010.
Shares look pretty cheap at a forward EPS of 31x FY11 EPS estimates compared to a staggering 342x for Limelight Networks (Nasdaq: LLNW).
Data from Bloomberg has 7 analysts with a Buy rating on IBM, 14 with a Hold, and one suggesting to Sell. The analyst price target average is $47, with a high of $60 and a low of $35.
Analyst Ratings Through the Quarter
In July, Craig-Hallum downgraded the shares from Buy to Accumulate, increasing their price target from $40 to $48.
August saw Goldman Sachs upgrade shares from Neutral to Buy, noting an attractive entry point following a pullback in the shares.
In September, Wedbush kept their Outperform rating on the shares, but increased their price target from $51 to $56.
Summary
Goldman Sachs expects AKAM to report EPS and revs above expectations for the third quarter. Their Media & Entertainment segment will continue to benefit from online video consumption. They note that "[they] have already seen some evidence of cable/satellite/telco video subscribers switching to over-the-top video, and this trend is likely to gain strength as consumers consume more video online. Netflix’s latest streaming subscriber data also shows the accelerating growth in online video consumption." Value-added service revs should remain strong and keep margins stable. Goldman is looking for an EPS of $0.28 on revs of $253.9 million.
Wedbush sees page views increasing about 6% sequentially, just below their previous estimate of 9%, but enough to add an additional $1 million to revs. Strong traffic volumes should also be driven by bigger sporting events through the quarter (World Cup, Wimbledon). Wedbush expects Q310 video viewing sessions to increase by 4% sequentially. More moderate price declines are expected as well, easing pressure on margins. Wedbush is looking for an EPS of $0.35 on revs of $252 million.
Akamai Technologies Inc. is expected to release their Q310 earnings on Tuesday, October 27, 2010, at approximately 4:00pm EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
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