Akamai Technologies’ 3Q revenues jumped 12% to $793 million year-on-year and surpassed analysts’ expectations of $775.2 million, reflecting higher demand for its security products and increased traffic across its edge platform. However, shares of the content delivery network and cloud infrastructure provider fell 3.8% in the extended trading session on Tuesday.
In addition, Akamai (AKAM) said that its planned acquisition of Asavie will be dilutive to 4Q adjusted EPS by a penny. Moreover, the company cautioned that India’s ban on 59 China-based web applications will continue to hurt its financial results throughout the remainder of 2020.
The company’s 3Q adjusted EPS jumped 19% to $1.31 year-over-year and beat Street estimates of $1.23. The company’s CEO Dr. Tom Leighton said, “Our excellent third quarter results were driven by the continued strong performance of our security products and sustained high traffic levels on the Akamai Edge platform.” (See AKAM stock analysis on TipRanks).
Akamai raised its 2020 revenue guidance to $3.164 billion and $3.189 billion, up from the earlier guidance range of $3.125-$3.175 billion. Adjusted EPS is now forecasted to land in the range of $5.16-$5.20, higher than the previous projection of $5.02-$5.12. For 4Q, the company expects revenues and adjusted EPS in the range of $812-$837 million and $1.28-$1.32, respectively.
Following the earnings report, Oppenheimer analyst Timothy Horan reiterated a Buy rating with a price target of $130 (21.8% upside potential). In a note to investors, Timothy wrote that Akamai “benefits from the shift of entertainment and commerce to the Internet. It is well positioned to provide security, better wireless latency, and to enable broadcast video over the public Internet.”
Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 9 Buys and 3 Holds. With shares up 23.5% year-to-date, the average price target of $122.67 implies additional upside potential of about 15% to current levels.
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