Deutsche Bank Remains in Bull Camp on Akamai (AKAM)
Deutsche Bank maintained a Buy rating on Akamai Technologies (NASDAQ: AKAM) with a price target of $80. Shares declined after it reported Q3 results and weak Q4 guidance.
"The Q4 guide: $557M-577M / 60-64c disappointed versus consensus: $596.7M / 66c, the weakness driven mainly by anticipated revenue declines at 3 major media customers (tough Y/Y comps and Do It Yourself initiatives around Software Downloads, etc). We remain with our longer-term positive AKAM call, noting AKAM likely to thematically benefit from “Over the Top” initiatives from the “Long Tail” of media companies in FY16+," said analyst Vijay Bhagavath.
"While the bears are likely to view AKAM as a sideways trade (and no real “long story”) near-term, especially post the expectations reset tonight (stock trading at a trough multiple: ~9x EV/EBITDA DB FY17e), we firmly remain in the bull camp with our longer term positive view," continued the analyst.
Bhagavath added, "Our LONG thesis argues for AKAM likely to be a secular beneficiary of the “Over the Top”, “Cloud Security”, and “Internet Gaming” Mega Themes in FY16+. While NFLX, GOOGL, AMZN are outliers in Over the Top, our research suggests that AKAM is likely to be the top choice for the “Long Tail” of media companies, as major broadcasters gear up to stream Linear and On-Demand Content. AKAM has +3500 Media customers. A modest +$10M in upside from Over the Top revenues for a +$250M a Quarter Media business during FY16 is basis for mid to high teens growth in AKAM’s Media business (versus a low teens consensus view)."
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Shares of Akamai Technologies closed at $75.55 yesterday.