Akamai Technologies Prepares for Fourth Quarter Earnings Release Amid Mixed Performance

Akamai Technologies, Inc. (AKAM), a key player in cloud computing based in Cambridge, Massachusetts, boasts a market cap of $13.7 billion. The company focuses on security and content delivery services, helping businesses create and manage applications while keeping user experiences secure.

Upcoming Earnings Review

The company is set to announce its fourth-quarter results after the market closes on Thursday, February 20. Analysts predict that Akamai will report a non-GAAP profit of $1.01 per share, representing a 14.4% decrease from last year’s $1.18 per share. Out of the last four quarters, Akamai has only met Wall Street earnings projections once, missing estimates three times. For the most recent quarter, its adjusted EPS grew by 7.1% year-over-year to $1.05 but fell short of analysts’ expectations by 4.6%.

Future Earnings Forecast

For the entire fiscal year 2024, Akamai is projected to deliver an adjusted EPS of $4.28, down 3.6% from the previous fiscal year’s $4.44. However, the outlook for fiscal year 2025 appears brighter, with expected earnings increasing by 7.5% to $4.60 per share.

Stock Performance Overview

Akamai’s stock has faced challenges in the past year, dropping 22.7% while the S&P 500 Index ($SPX) rose 26.5% and the Technology Select Sector SPDR Fund (XLK) recorded a 22.1% increase.

Recent Challenges and Analyst Outlook

The company’s stock fell 14.4% following the Q3 results released on November 7, where it missed Wall Street’s earnings expectations. Revenue from its content delivery network has continued to decline, and the fourth quarter guidance also did not meet market expectations. Delivery revenues decreased by 15.9% year-over-year, totaling $319.1 million. Conversely, revenues from the Security and Compute segments grew substantially, contributing to a total revenue increase of 4.1% year-over-year, surpassing analyst estimates, with overall revenue exceeding $1 billion.

In Q3, Akamai incurred a restructuring charge of $82 million, leading to increased operating expenses and a significant 59.9% decline in operating income, which fell to $70.6 million.

Despite the challenges, analysts show moderate optimism for Akamai. The stock currently holds a consensus “Moderate Buy” rating. Of the 19 analysts following the stock, 13 recommend a “Strong Buy,” one suggests “Moderate Buy,” four propose a “Hold,” and one favors a “Strong Sell” rating. The average price target stands at $114.79, indicating a potential upside of 26.1% from its current levels.

On the date of publication, Aditya Sarawgi did not hold any positions in the securities mentioned in this article. All information and data in this article serve informational purposes only. For further details, please view the Barchart Disclosure Policy here. More news from Barchart

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