Jefferies Upgrades Limelight Networks to Buy From Hold (LLNW)

Jefferies and Company is out with a research report this morning, where its analysts upgraded shares of Limelight Networks

to Buy, from Hold; they have a $6.00 price target on the stock. The Jefferies analysts said, “EyeWonder should provide enough high-margin software and services to drive higher revenue growth and first-time profitability for Limelight. Price stabilization and increasing online rich media traffic, although not specific to any one event, could combine with growing value-added services to produce further upside. We expect to see the first evidence of the new business mix, and an inflection in the profitability profile of the firm, this quarter.” They added, “These new estimates do not include any change regarding pricing or traffic levels in the core CDN business, and they do not assume any increase in value-added services. For 2010 we now expect revenue/pf EPS of $196mm/11c up from $167mm/(4c). For 2011 we now expect $237mm/14c, up from $188mm/(2c). Our estimates for EyeWonder include $28mm in revenue this year, and $45mm in revenue in 2011.” The Jefferies analysts closed by saying, “Our $6.00 price target is 10x 2011 EV/EBITDA, an attractive 10% EBITDA yield. The multiple is also below revenue growth and way below Akamai's multiple. Investment risks include industry-wide price pressure, new telco entrants into the CDN market, low margins vs. the competition, and integration risk around EyeWonder.”