Evercore ISI analyst Amit Daryanani has maintained their bullish stance on AKAM stock, giving a Buy rating today.
Amit Daryanani has given his Buy rating due to a combination of factors, among which the standout performance of Akamai’s compute and security segments is prominent. Despite a modest miss on the top line, Akamai’s quarterly results demonstrated a solid beat on the bottom line, with a 3 cents EPS advantage over Wall Street expectations. This performance was underpinned by a robust year-over-year growth of 25% in compute and 21% in security, both calculated in constant currency. The growth in these areas is particularly significant as it indicates a shift towards higher-margin business segments that could drive future profitability.
Despite facing some headwinds in the delivery segment and a reduction in guidance for the upcoming quarter and fiscal year, Daryanani seems to believe in the long-term value of Akamai’s strategic investments in compute and security. The acquisition of API security provider Noname, expected to contribute around $20M in revenues in the second half of the year, is one such investment that aligns with the company’s focus on these high-growth areas. Although the lowered guidance for the near term reflects certain market challenges, Daryanani appears to see these as temporary setbacks against the backdrop of Akamai’s strong core business and market position, warranting a continued Outperform rating, albeit with a slightly adjusted price target to accommodate near-term earnings expectations.
Based on the recent corporate insider activity of 116 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of AKAM in relation to earlier this year.
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Akamai (AKAM) Company Description:
Akamai Technologies, Inc. engages in the provision of cloud services for delivering, optimizing and securing content and business applications over the Internet. Its products offers web and mobile performance solutions, cloud security solutions, enterprise solutions, network operator solutions, media delivery solutions and services and support solutions. It also engages in content delivery network, or CDN, services to make the Internet fast, reliable and secure. The company was founded by Frank Thomson Leighton, Jonathan Seelig, Randall S. Kaplan, and Daniel Mark Lewin on August 20, 1998 and is headquartered in Cambridge, MA.
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