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On Friday, Scotiabank (TSX:BNS) analyst Patrick Colville revised the price target on Akamai Technologies (NASDAQ: NASDAQ:AKAM) stock, reducing it to $107.00 from $115.00, while maintaining a Sector Outperform rating. The revision for the $14.78 billion market cap company came after Akamai’s fourth-quarter results and its 2025 guidance. According to InvestingPro data, analyst targets currently range from $72 to $140, with the stock showing relatively low price volatility.
In his commentary, Colville noted several positive aspects of Akamai’s fourth-quarter performance, such as the slowing decline in the Content Delivery segment, which he views as essential for the recovery of the company’s shares. The company achieved 4.7% revenue growth in the last twelve months, with a healthy gross profit margin of 59.4%. Additionally, he highlighted the robust sales in the Security segment, which align with Scotiabank’s checks with Chief Information Officers (CIOs).
Colville also commended Akamai’s management for maintaining a shareholder-friendly approach, which he considers significant to his positive outlook on the company. However, he expressed disappointment with the 2025 guidance for Edge Compute and operating margins, describing them as lackluster.
Despite the lowered expectations for certain aspects of the business, Colville reiterated his confidence in Akamai as a transformative software company. He underscored that the buy thesis for Akamai is based on the expectation that Security and Edge Compute will constitute nearly 75% of the company’s revenue by the end of 2025. Colville concluded by stating that Akamai’s current valuation, being at multi-year lows, offers limited downside risk.
In other recent news, Akamai Technologies reported fourth-quarter earnings that exceeded analyst expectations, posting an adjusted earnings per share of $1.66, surpassing the consensus estimate of $1.52. The company’s revenue for the quarter was $1.02 billion, slightly above the projected $1.01 billion, marking a 3% year-over-year increase. Despite these positive results, Akamai’s guidance for the first quarter and full year 2025 fell short of expectations, with projected EPS and revenue figures below analyst estimates.
BofA Securities downgraded Akamai from Buy to Neutral, reducing the price target to $100, citing a transition towards emerging markets such as API security and Cloud Infrastructure Services. Similarly, Piper Sandler downgraded the stock to Neutral with a $100 price target, expressing caution over Akamai’s new long-term business framework and lower-than-expected 2025 guidance.
Meanwhile, Raymond (NSE:RYMD) James maintained its Outperform rating despite lowering the price target to $110, acknowledging Akamai’s strong core business areas in compute and security. Evercore ISI also kept an Outperform rating but adjusted the price target to $105, noting robust earnings and a significant shift in revenue composition towards security and compute. These developments reflect a mixed outlook from analysts as Akamai navigates through strategic transitions and market challenges.
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