Akamai Technologies, Inc. (NASDAQ:AKAM) shareholders are probably feeling a little disappointed, since its shares fell 8.6% to US$115 in the week after its latest yearly results. Results were roughly in line with estimates, with revenues of US$3.8b and statutory earnings per share of US$3.52. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
NasdaqGS:AKAM Earnings and Revenue Growth February 15th 2024
Following the latest results, Akamai Technologies' 22 analysts are now forecasting revenues of US$4.09b in 2024. This would be a satisfactory 7.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 23% to US$4.47. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.12b and earnings per share (EPS) of US$4.45 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$126, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Akamai Technologies analyst has a price target of US$150 per share, while the most pessimistic values it at US$81.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Akamai Technologies'historical trends, as the 7.2% annualised revenue growth to the end of 2024 is roughly in line with the 7.0% annual growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues grow 10% annually. So it's pretty clear that Akamai Technologies is expected to grow slower than similar companies in the same industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Akamai Technologies analysts - going out to 2026, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Akamai Technologies , and understanding it should be part of your investment process.
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