Akamai: Seeing More Competition, Goldman Says 'Sell'

Akamai (AKAM) shares are trading lower this morning after Goldman Sachs analyst Derek Bingham cut his rating on the content delivery network operator to Sell from Neutral and trimmed his price target on the stock to $33, from $35. Bingham also reduced his 2008 non-GAAP EPS estimate to $1.69 from $1.72; for 2009 he ’s down to $2.01 from $2.06.

Bingham notes that the stock’s recent run pushed it well beyond his old price target. “Beyond valuation,” he added in a research note this morning, “we are also concerned about intensifying competition as private entrants proliferate and selected large network operators begin to eye the space.” He contends that most of the company’s 2,700 customers will be able to increase pressure on Akamai as contracts come up for renewal this year.

“Catalysts that could be negative for the shares include entry by additional large network providers, acquisitions of smaller vendors by the same, macro headwinds and a potential emergence of peer-to-peer offerings,” he writes.