On Monday, DA Davidson has increased its price target on Akamai Technologies (NASDAQ: NASDAQ:AKAM) shares to $120 from the previous $115, while keeping a Buy rating on the stock. The firm's analysis follows a group investor call that featured Akamai's CFO Ed McGowan and Head of Investor Relations Mark Stoutenberg. During the call, management provided insights into various aspects of the business, including the Delivery and Compute segments, as well as the growth potential of Noname.
In contrast to Fastly (NYSE:FSLY)'s reports on market share shifts, Akamai's management presented a different perspective on the Delivery segment, noting that while overall traffic growth levels are weak, their position remains strong. The firm's representatives expressed confidence in the Compute business, anticipating further growth acceleration, especially as the enterprise segment becomes a larger part of the company's revenue mix.
The management team also conveyed optimism about the growth potential of Noname, a recent acquisition by Akamai. They highlighted that one of the company's key objectives is to expand operating margins into the low 30s range.
The price target adjustment reflects DA Davidson's positive outlook on Akamai Technologies' strategic direction and potential for growth in key business areas. The Buy rating remains unchanged, signaling the firm's continued confidence in the company's performance.
In other recent news, Akamai Technologies has reported better than expected second quarter results for 2024, leading to an increase in its overall guidance for revenue, EBITDA, and Non-GAAP EPS for the same year. The company has also finalized the acquisition of Noname Security, a prominent API security company, for approximately $450 million.
InvestingPro Insights
Following DA Davidson's optimistic assessment, Akamai Technologies (NASDAQ: AKAM) also shows promising indicators from an InvestingPro perspective. The company's management has been proactively engaging in share buybacks, reflecting confidence in the company's value. Additionally, analysts have been revising their earnings estimates upwards, signaling positive sentiment around Akamai's financial prospects. With a P/E ratio of 24.15 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at 23.63, the company is trading at a low price-to-earnings ratio relative to its near-term earnings growth potential, as indicated by a PEG ratio of 0.76 for the same period.
Furthermore, Akamai has shown significant return over the last week, with a 1-week price total return of 11.16%. The company is also profitable over the last twelve months, which aligns with analysts' predictions that Akamai will maintain profitability this year. It's worth noting that Akamai does not pay a dividend, which could be a factor for income-focused investors to consider. For those seeking more insights, there are additional InvestingPro Tips available at https://www.investing.com/pro/AKAM.
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