On Monday, Scotiabank initiated coverage on Akamai Technologies (NASDAQ:AKAM) with a Sector Outperform rating and a price target of $110.00. The firm's analysis points to Akamai's strong prospects in security and edge computing, which are expected to become the company's main revenue drivers in the near future.
According to Scotiabank, these segments could account for approximately 75% of Akamai's business by 2025. This shift is seen as a key factor in the company's ability to exceed market expectations and drive growth. Despite recent market volatility affecting Akamai's stock price, Scotiabank suggests that the current valuation represents an attractive entry point for investors.
The analyst from Scotiabank highlighted Akamai's transition from a content delivery network to a focus on security and edge compute as a strategic move that could rejuvenate the company's growth trajectory. With a forward-looking free cash flow multiple of around 18 times the 2025 estimated figures, the firm views Akamai's shares as a solid investment.
Scotiabank's coverage comes at a time when Akamai Technologies has experienced significant fluctuations in its share price. However, the firm's endorsement reflects confidence in the company's strategic direction and potential for outperformance in the coming years.
In other recent news, Akamai Technologies has completed its acquisition of Noname Security, a notable API security company, for approximately $450 million. This strategic move is expected to enhance Akamai's capabilities in the API security domain, catering to diverse business and integration needs. Meanwhile, analysts have been adjusting their outlook on Akamai.
Piper Sandler maintained an Overweight rating with a steady price target of $144.00, highlighting growth in Akamai's new security packages and potential for future upselling in the enterprise compute segment. KeyBanc, however, reduced its price target for Akamai to $119 while maintaining its Overweight rating, due to lower-than-anticipated Delivery segment revenues and foreign exchange headwinds. Baird also reduced its price target to $120 but maintained an Outperform rating, viewing the current dip in Akamai's stock as a buying opportunity.
InvestingPro Insights
In light of Scotiabank's optimistic outlook on Akamai Technologies, recent data from InvestingPro further informs potential investors about the company's financial health and market position. Akamai's market capitalization stands at a robust $13.78 billion, and it is trading at a P/E ratio of 21.8, which adjusts to 21.45 for the last twelve months as of Q1 2024. This valuation is supported by a PEG ratio of 0.71, suggesting that the company's earnings growth could be undervalued at its current share price.
InvestingPro Tips indicate that Akamai's management has been actively buying back shares, a sign of confidence in the company's future performance. Additionally, the company's liquid assets surpass short-term obligations, providing financial stability. With Akamai trading near its 52-week low yet analysts predicting profitability this year, the current market valuation could present a compelling opportunity for investors. For those considering an investment, there are 8 additional InvestingPro Tips available, which can be accessed with the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
These insights and data points offer a more detailed perspective on Akamai's financial standing and market potential, complementing the analysis provided by Scotiabank and giving investors a comprehensive view as they consider adding AKAM to their portfolios.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.