Citi analysts opened a 30-day upside catalyst watch on Akamai Technologies (NASDAQ:AKAM) in a note Monday, saying the bank sees upside to the company's 4Q results and guidance. The analysts also raised the bank's rating for Fastly, Inc. (NYSE:FSLY) to Neutral and the price target to $20 from $11 per share.
The AKAM upside view is based on improving operating conditions against a prudent 4Q23 guide, which calls for modest growth deceleration against the year's easiest comp and where expectations on CY24E are manageable, said analysts.
"Delivery continues to stabilize against CDN rationalization, helping drive 4 consecutive-Qs of growth re-accel, and where upside may come via key streaming providers who have witnessed improved demand and recent success with exclusive sports streaming events (NFL playoff game)," the analysts wrote.
"Security offers greater upside as healthy demand against an evolving threat landscape already delivered 2 straight Qs of growth acceleration and upward revisions to segment's full-year guide."
While compute serves as a topline call option, analysts believe the asset should generate immediate profitability upside as insourcing cloud workloads remain in the early innings.
The "favorable set up also comes against greater FX stability and where slight depreciation in the USD recently could be another source of guidance upside," they concluded.
On Fastly, analysts noted the company's credit track record of credibility-rehabilitation under new-ish CEO Nightingale, whose "clearer product vision and crisper portfolio/packaging strategy should sustain balanced execution."
This, counterbalanced by risks stemming from CRO departure, customer concentration, and lack of scale/differentiation/breadth in Security, contrasting peers," they added.