On Tuesday, Scotiabank maintained its positive outlook on Akamai Technologies (NASDAQ:AKAM) shares, reiterating a Sector Outperform rating with a steady price target of $115.00. Following investor meetings with Akamai's CEO Dr. Tom Leighton and Mark Stoutenberg, Head of Investor Relations, the firm expressed confidence in Akamai's strong position within the security sector and its growing potential in edge computing.
The discussions during the investor meetings spanned a range of topics, including the durability of Akamai's growth in security services and the early adoption of edge compute technology. Inquiries also touched upon the point at which there might be a stabilization in content delivery and the company's approach to capital discipline.
Scotiabank emerged from these meetings with a reinforced view of Akamai's capabilities, particularly in security and the nascent opportunities in edge computing. Although content delivery continues to present challenges, the trends are reportedly in line with expectations.
Acknowledging the complexity of Akamai's operations, Scotiabank anticipates that a shift in the company's business mix could ignite growth by the year 2025. This growth is expected to contribute to reducing the significant valuation discount Akamai currently has in comparison to its industry peers.
The endorsement comes at a time when Akamai is navigating the dynamic tech landscape, with security and edge computing being critical areas of focus for the company. Scotiabank's outlook suggests a belief in Akamai's strategic direction and its potential to capitalize on these key technology trends in the near future.
In other recent news, Akamai Technologies has reported strong second quarter results for 2024, exceeding expectations and leading to an increase in its overall guidance for revenue, EBITDA, and Non-GAAP EPS for the year. Several firms have responded to these results by adjusting their outlook on the company.
Citi has raised its price target to $115 and maintained a neutral stance. DA Davidson increased its price target to $120, RBC Capital to $100, TD Cowen to $131, and Scotiabank to $115. Guggenheim also upgraded the stock from Neutral to Buy and set a new price target at $128.
Akamai's recent acquisition of Noname Security, a leading API security company, for approximately $450 million has been highlighted as a positive development, expected to enhance the company's capabilities in the API security domain. Analysts have noted Akamai's strategic focus on key growth areas like Security and Compute as a beneficial approach for navigating slower growth in the Delivery segment.
Despite the challenges in the Delivery segment, Akamai's Compute and Security segments have shown promising growth, with the potential to contribute significantly to revenues. These recent developments reflect shifts in Akamai's strategic direction and growth potential in key business areas.
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