The Internet is a busy place and sometimes the traffic patterns can stand in the way of business efficiency. There is an outfit in Cambridge, Massachusetts that runs interference for big clients, keeping their Web performances up to proper corporate standards.
Akamai Technologies (NASDAQ: AKAM) provides services for the delivery of enterprise Internet content. Through its network of some 15,000 servers in nearly 70 countries, Akamai analyzes and manages Web traffic, transmitting client content through the server geographically closest to the consumer. The company also offers audio and video streaming services, business intelligence and content targeting applications, as well as on demand pay-as-you-go extra capacity to avoid network congestion during periodic spikes in traffic. Clients include Adobe Systems (NASDAQ: ADBE), FedEx (NYSE: FDX) and XM Satellite Radio (NASDAQ: XMSR).
The stock rose last week, on word the firm had launched a service to boost the speed and quality of e-mail, voice over IP services and file transfers within an organization. The service also speeds up access for employees using wireless and remote fixed-line networks. Akamai said expanding companies need such services, as employees and business partners become more dispersed. AmTech Research subsequently initiated the stock with a "buy" and a $50 price target.
Following the gain, shares have been defining a bullish "flag" consolidation pattern. Equities frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Brokers recommend the issue with four "strong buys", seven "buys", ten "holds" and one "sell". Analysts expect a 30% average annual growth rate, through the next five years. The AKAM Price to Book ratio (4.75), Sales Growth rate (51.79%), EPS Growth rate (328.57%), Operating Margin (20.09%) and Net Profit Margin (14.26%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 89% of the outstanding shares. The stock is one of those used to calculate the S&P 500, the Nasdaq 100 and the AMEX Internet Indexes. Over the past fifty-two weeks, it has traded between $27.75 and $59.69. A stop-loss of $29.50 looks good here. Note that the firm is expected to report third quarter results on October 24th, after the close.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
