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Minyanville Professor Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.
While Akamai Technologies, Inc. (NASDAQ: AKAM) is starting to get compellingly cheap on a valuation basis. It's also supposed to be one of those names that beats numbers like clockwork. AKAM's forward numbers are still sporting plenty of growth, but they have been lowered. Now many analysts will also lower numbers.
Unfortunately, we're not in a market that is looking forward. It's discounting companies that "could" have a re-acceleration of growth when the economy materially picks up steam again, or when the world realizes that we're not in recession/depression. The market we're in still overly punishes stocks that "feel" like they might have the bad news mostly (or fully) priced in. AKAM around $30 was feeling like a miss that was priced in. However, after hours the stock traded down a quick $5-6 and from this current level the near term direction will likely be determined by how much love is still left in the analyst community. If the analysts defend the name we could see a quick snapback.
AKAM's balance sheet is good but it's not over-flowing with the net cash levels of many other companies I currently follow or have positions in .
So AKAM has now joined the ranks of many other tech names, and is now either a show me stock, a "value" stock, or both -- with a P/E at 15 with now lowered 25% top and bottom line growth.
Bottom line, I still think AKAM has a very unique and valuable set of assets, which longer term should support a franchise value much greater than current levels. The market is providing great opportunities to build a list of potential longs and I have AKAM on mine. On much of a reaction lower, I'm looking at the $23's as a level that I may choose to fight the valuation fight with the bears.
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