Akamai Tech eases congestion on the information superhighway

Posted Feb 8th 2008 5:41PM by Joseph Lazzaro
Filed under: Stocks to Buy

Some investors / readers probably are not aware that the Internet -- critical as it is today for commercial activities and the flow of information -- was not designed to handle the volume and complexity of today's web tasks. Moreover, the appearance of Internet bottlenecks created an opportunity for Akamai Technologies.

Akamai Technologies, Inc. (Nasdaq: AKAM) solutions accelerate and improve the delivery of Internet content and applications.

Analysts like Akamai's broad, 1,800-member customer base, including many blue chip companies. Further, analysts also like the fact that AKAM has continued to deliver material revenue increases and earnings gains, despite infrastructure and related expansion investments.

Further, the consensus among analysts is that 28,000-server Akamai will continue to have a competitive advantage in its key business segments for at least the next two years. The Reuters FY 2008/FY 2009 EPS consensus estimates for AKAM are $1.68 to $2.04.

The risks? Analysts are keeping an eye on Akamai's convertible debt, as well as on technological change in the sector.

The First Call mean rating for AKAM is: Buy [25 firms]. Mean 2008 target: $43 [high: $60, low: $32].

Stock Analysis: Akamai is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from AKAM's shares. Sell/Stop Loss if you were to purchase shares in this company: $17.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: AKAM, Akamai Technologies, EdgePlatform, Internet, servers, technology, World Wide Web