Akamai Sees Strong Revenue Growth; Analysts Raise Targets

Sep.15.06 | About: Akamai Technologies, (AKAM)

Akamai (NASDAQ:AKAM) said at a meeting with analysts on Wednesday that the company in 2007 should be able to grow revenue at least 30% and profits at least 35%. It was the first analyst meeting the company has held in four years, and to read the response from the Street, it was worth the wait.

Deutsche Banks’ Todd Raker
raised his rating on the stock Buy from Hold, and increased his price target on the company to $55 from $33. “We have consistently viewed AKAM as the best fundamental growth company in our coverage universe, but we downgraded to hold earlier this year due to valuation,” he wrote. “In hindsight, we have significantly under-estimated the growth in ARPU (average revenue per user) and we are adjusting our financial model to reflect a more aggressive stance on ARPU…AKAM’s value proposition is growing stronger as broadband penetration continues to grow.”

Michael Turits, of Prudential Securities raised his 2007 revenue forecast for the company to $569 million, from $542 million, with profits increasing to 91 cents a share from 81 cents. For 2006, he’s now at 59 cents, up from 58 cents. He continues to rate the stock Overweight, and raised his price target to $51 from $40.

Katherine Egbert, of Jefferies
, likewise increased her 2007 forecast; she now sees revenue at $543 million, up from $530 million; her profit forecast jump to $1.14 a share, from $1.10. she’s at 84 cents for 2006. (No, I can’t quite explain the wide gap between her numbers and Prudential’s numbers.) She raised her price target to $47, from $45.

I do have one nit to pick here, which is that Akamai issued that 2007 guidance - its first for next year - without issuing a press release or filing an 8-K. I tracked down a copy of a 50-page transcript of their meeting on a subscription site; the only way for the average investor to track down what they actually said, rather than relying on third-hand reports would be to listen to an entire day’s worth of presentations. Not exactly the user friendly approach, Akamai.