On Tuesday, Evercore ISI maintained its Outperform rating on Akamai Technologies (NASDAQ:AKAM) stock with a steady price target of $110.00. According to InvestingPro analysis, Akamai, currently valued at $14.62 billion, is trading slightly below its Fair Value, supporting the positive outlook. The company maintains a "GOOD" overall financial health score, suggesting solid fundamentals.
The firm adjusted its fourth-quarter 2024 and full-year 2025 revenue and earnings per share (EPS) forecasts to account for Akamai's recent acquisition of specific assets from Edgio. According to the update, Akamai anticipates the acquisition will increase its fourth-quarter revenues by $9-$11 million, while also incurring $15-$17 million in transition service costs.
Consequently, the transaction is expected to dilute EPS by $0.03-$0.05 in the fourth quarter of 2024. With a current P/E ratio of 28.24 and revenue growth of 5.92% over the last twelve months, investors can access deeper insights and additional metrics through InvestingPro's comprehensive research reports.
For the calendar year 2025, the acquisition is projected to boost Akamai's revenue by $80-$100 million. Transition service expenses for the same period are estimated to be between $25 and $30 million. Despite these costs, Akamai's favorable cost structure and potential for cross-selling are anticipated to enhance profitability and contribute an estimated $0.15-$0.20 to EPS in 2025.
The firm's revised estimates for the fourth quarter now stand at $1.02 billion in revenue and $1.49 in EPS, compared to the previous forecast of $1.01 billion in revenue and $1.52 in EPS. This adjustment positions Evercore ISI's expectations slightly above the street's consensus, which is at $1.0 billion in revenue and $1.53 in EPS.
For the full year 2025, Evercore ISI's updated estimates are $4.283 billion in revenue and $6.92 in EPS, an increase from the earlier projections of $4.193 billion in revenue and $6.76 in EPS, and notably higher than the street's consensus of $4.227 billion in revenue and $6.61 in EPS.
In light of the acquisition, Evercore ISI anticipates a smaller decline in Akamai's Delivery segment for the calendar year 2025, with revenues now expected to decrease by high single digits, as opposed to the previously expected low double-digit decline. This outlook reflects the firm's assessment of the impact of the recent asset purchase on Akamai's financial performance.
InvestingPro data reveals that management has been actively buying back shares, demonstrating confidence in the company's future prospects. InvestingPro subscribers can access over 30 additional financial metrics and insights about Akamai's performance and valuation.
In other recent news, Akamai Technologies has seen significant developments. The company recently reported its first billion-dollar quarter with total revenue reaching $1.005 billion, marking a 4% increase year over year. Security revenue rose to $519 million, a 14% increase, and compute revenue grew by 28% to $167 million.
Baird, the financial services firm, adjusted its stock price target for Akamai, maintaining an Outperform rating, while highlighting the company's security and compute segments, which are expected to continue experiencing double-digit growth.
In addition, Akamai won a $125 million bid to acquire contract assets from Edgio, a move approved by the US Bankruptcy Court. Piper Sandler expects this acquisition to contribute roughly $10 million in the fourth quarter of 2024 and about $90 million in the fiscal year 2025. The firm also predicts an addition to earnings per share (EPS) between $0.15 and $0.20.
Furthermore, Oppenheimer upgraded Akamai Technologies stock from Perform to Outperform, setting a price target of $120.00. The upgrade was influenced by the recent changes in the content delivery network market dynamics and the acquisition of Edgio's customers by Akamai.
This consolidation is expected to create a more favorable market environment for Akamai, which has demonstrated solid performance with a 5.92% revenue growth over the last twelve months and a net income of $526 million.
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