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Akamai, Here of Earnings, Jumps 5% Amidst a Lousy Market

Akamai CEO Tom Leighton on CNBC, October 25th, 2017.

The Nasdaq Composite Index is down 38.85, or 0.6%, at $6,559.58. Several of the names that reported yesterday are down, despite in some cases beating, including Advanced Micro Devices (AMD), off 12%, at Texas Instruments (TXN), down 1.7%.

The company turned in a 6% increase in revenue, year over year, at $621 million, and earnings per share, excluding some costs, of 62 cents. That was better than the consensus for $611 million and 59 cents.

The outlook for this quarter, $638 million to $656 million in revenue, and earnings per share of 60 cents to 65 cents, was also better than consensus for $641 million and 60 cents a share.

On CNBC this morning, CEO Tom Leighton told host Carl Quintanilla that his company is becoming less and less reliant on the giant Internet companies as customers. They collectively make up just 8% of revenue now, he says, down from 25% in recent years.

Taking his cue from that, CFRA’s Scott Kessler reiterates a Strong Buy on the shares, and a $62 price target, writing that "We have been encouraged by a decreasing reliance on large Internet platform customers."

B. Riley’s Sameet Sinha reiterates a Buy rating, and raises his price target to $70 from $60, declaring the company’s "quarterly execution” to be “stellar."

“Management is being pragmatic in addressing the issues that have pressured shares in recent quarters (media under-performance, elevated expenses),” he writes.

"The opportunity is in continuing outreach to its Top 250 clients to convey the new value proposition and gaining share of traffic,” continues Sinha.

"We believe the valuation discount as a result of recent issues should begin to narrow as the company makes progress on deal integration and Media stabilization."

Others are not so convinced.

Instinet's Jeffrey Kvaal reiterates a Neutral rating, and raises his price target to $50 from $47, writing that there’s relief in the company’s “media” business, which had been a disappointment for several quarters running.

But the company’s security business missed expectations, notes Kvaal, and it’s “too early to call an inflection,” he writs.

"The Media business, while inflecting, is still declining. Its new pricing structure should mean revenues will lag traffic growth. OTT does not seem to have inflected just yet and the new enterprise products should only begin contributing in 2H18."


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