Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Friday, Guggenheim reaffirmed its Buy rating on Akamai Technologies (NASDAQ:AKAM) with a steady price target of $133.00. The firm’s analysts, following a meeting with Akamai’s Executive Vice President & CFO Ed McGowan and Head of Investor Relations Mark Stoutenberg in New York, expressed continued confidence in the company’s growth strategy.
The analysts highlighted Akamai’s potential to expand its market leadership in Content Delivery Network (CDN) services into the Security and Cloud solutions sectors. They believe these new offerings will not only stand on their own but also enhance the value of Akamai’s core CDN business. The Guggenheim team underscored the importance of CDN technology as a fundamental component for both Security and Compute services, which they expect will lead to improved financial metrics like gross retention and price stability.
According to Guggenheim’s analysis, Akamai’s shares are significantly undervalued at current trading levels, which are around 4 times Enterprise Value/Next Twelve Months (EV/NTM) Recurring Revenue. This valuation perspective aligns with InvestingPro analysis, which indicates the stock is currently undervalued with an EV/EBITDA ratio of 13.07x and a P/E ratio of 23.83x. This valuation gap supports their reiteration of the $133 price target for the company’s stock. For deeper insights into Akamai’s valuation metrics and 8 additional exclusive ProTips, consider exploring the comprehensive Pro Research Report available on InvestingPro.
The endorsement from Guggenheim comes as a reinforcement of their previous upgrade of Akamai’s stock on July 28, 2024. The firm’s analysts stand by their thesis that Akamai is well-positioned to leverage its CDN leadership to drive growth in its Security and Cloud segments, thereby increasing the overall business value.
Akamai Technologies, headquartered in Cambridge, Massachusetts, specializes in providing CDN and cloud services to help businesses deliver content and applications over the Internet with security and performance. The company maintains healthy financials with a revenue of $3.99 billion over the last twelve months and a solid gross profit margin of 59.39%. The company’s stock continues to be monitored by investors and analysts for signs of progress in its strategic initiatives, with InvestingPro data showing analyst targets ranging from $72 to $140 per share.
In other recent news, Akamai Technologies has seen several significant developments. S&P Global Ratings revised Akamai’s outlook from stable to negative due to rising leverage, maintaining the company’s ’BBB+’ rating. The company’s leverage increased to 1.8x in 2024, surpassing S&P’s 1.5x threshold, driven by higher debt levels, acquisitions, and capital expenditures. In a notable insider transaction, CEO F. Thomson Leighton purchased approximately $3 million of Akamai’s common stock, signaling confidence in the company’s prospects. This purchase was disclosed in a recent SEC filing and is often viewed positively by investors.
Additionally, Akamai announced a new executive compensation strategy for 2025, which includes stock-based bonuses and restricted stock units (RSUs). The compensation plan ties bonuses to corporate performance objectives and includes a modifier based on environmental, social, and governance (ESG) goals. Meanwhile, board member Bill Wagner resigned to assume a CEO role at Semrush Holdings, Inc., with Akamai expressing gratitude for his contributions. These developments reflect ongoing strategic shifts within Akamai as it navigates financial and operational challenges.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.