Akamai Is Ready To Gain From Shift To Cloud, Synergies From Guardicore And Linode Acquisitions, Analysts Say

Keybanc analyst Thomas Blakey maintained Akamai Technologies, Inc AKAM with an Overweight and cut the price target from $116 to $110.

The re-rating reflected multiple compression in the market and AKAM shares.

Blakey views Akamai as well-positioned to benefit from workloads shifting to multi and hybrid cloud environments, including edge, resulting in a structural shift to revenue shifting from lower-margin CDN and Delivery business to faster growth and higher-margin Security+Compute.

Raymond James analyst Frank Louthan reiterated Akamai with an Outperform and lowered the price target from $115 to $94. He expects the FX impact to continue to weigh on reported results and the long sales cycle bears watching. 

Louthan said the integration of Linode with the compute platform can show better growth as FX results improve into next year.

Alex Henderson from Needham maintained a Hold rating on Akamai. The Akamai print came in as expected, with just 3% Y/Y Revenue growth and EPS down 13%

The results include substantial non-organic growth contributions from the Guardicore and Linode acquisitions. Henderson said that the Security, at 2% below forecast, is a bit disappointing, Compute was encouraging, at 2% ahead of target, and Delivery, down 15%, was a hair better than modeled. 

Guidance is roughly in-line with his prior forecast. Henderson remains on the sidelines on caution on OUS, the Compute strategy, and slowing Security growth.

RBC Capital analyst Rishi Jaluria reiterated Outperform on Akamai with a $110 price target. AKAM reported a relatively in-line Q3 with a light upside to consensus, with shares down 1% AMC. 

Delivery continues to underperform, but commentary makes him optimistic that the segment could stabilize sooner than expected. Security deceleration continued, with organic revenue now up only single digits YoY.

Macro seems to have worsened somewhat, with management noting longer sales cycles and more pressure in advertising-related business. 

Price Action: AKAM shares traded higher by 6.79% at $88.59 on the last check Wednesday.

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