In a report published on Tuesday, Goldman Sachs analyst Heather Bellini raised the price target on Akamai Technologies AKAM from $45.00 to $50.00 and maintained a Neutral rating.
In the report, Goldman Sachs noted, "We flag takeaways from three key sessions. First, during the Netflix keynote, the company commented that its decision to build an in-house CDN service (Open Connect) was necessitated by its unique market position since Netflix accounts for around 1/3rd of downstream internet traffic in the US. Although Netflix still uses some third party services in Latin America and the US, the goal is to move entirely in-house over time. Second, during a session on Amazon's CloudFront technology, the focus was ongoing solution innovation, with the pace accelerating notably in 2012, which we believe will be ongoing in 2013, and a focus on: i) aggressive pricing, ii) improved services, and iii) selective feature additions. We continue to see AMZN as a key market participant, with the potential to drive increasing price pressure with CDN and ancillary services (e.g. DSA) near-term and also move up market over time. Third, per Dan Rayburn's market overview: i) the video CDN market was sized at $549mn in CY11 growing to $1.1bn in CY16 (15% CAGR), ii) per GB prices are expected to be -25% yoy in 2013 vs. -20% in 2012, iii) significant DSA price compression is likely over the next few years."
Akamai Technologies closed at $47.89 on Monday.
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