Akamai Technologies Faces Challenges Despite Mixed Q1 Results
With a market capitalization of $11.3 billion, Akamai Technologies, Inc. (AKAM) operates in cybersecurity and cloud computing. Situated in Cambridge, Massachusetts, the company focuses on providing solutions for global enterprises to enhance security, performance, and reliability of their applications and digital experiences.
Stock Performance Underperforms Market
In the past year, AKAM shares have notably underperformed compared to the broader market. Over the last 52 weeks, Akamai’s stock has declined by 20.3%, in contrast to the S&P 500 Index ($SPX), which has seen an 11.5% increase. Year-to-date, AKAM shares are down 20%, while the S&P 500 has provided only marginal returns.
Akamai’s Notable Underperformance
Akamai’s performance also lags behind the iShares Cybersecurity and Tech ETF (IHAK), which surged 12.4% over the past year and 5.3% year-to-date.
Q1 2025 Results Show Mixed Signals
On May 8, Akamai’s stock plummeted 10.8% following the release of its mixed Q1 2025 results. The company reported an 8.2% year-over-year growth in Security revenues and a 14.5% increase in Cloud Computing revenues. However, these gains were partially offset by a 9.8% decline in Delivery revenue, resulting in a modest total revenue increase of 2.9% year-over-year, reaching $1 billion. Adjusted EBITDA rose 5.8% from the previous year to $441.3 million, yielding an adjusted EBITDA margin of 43.4%. Furthermore, the adjusted EPS stood at $1.70, marking a 3.7% increase year-over-year and surpassing the consensus estimate of $1.58.
Guidance for Fiscal 2025
Looking ahead, Akamai anticipates fiscal 2025 revenues of $4.05 billion to $4.2 billion, indicating a growth range of 1.5% to 5.2% from the fiscal 2024 revenue of $4 billion. However, the guidance for adjusted EPS is between $6.10 and $6.40, suggesting a slight decline of 1.2% to 5.9% from last year’s $6.48, which has raised concerns among investors.
Analyst Opinions
The consensus rating among 20 analysts covering AKAM currently stands at “Moderate Buy,” with nine “Strong Buy” ratings, one “Moderate Buy,” nine “Holds,” and one “Strong Sell.” This rating represents a marked shift from three months ago, when there were 13 “Strong Buy” ratings.
On May 9, Piper Sandler (PIPR) analyst James Fish elevated AKAM’s price target to $88 while adopting a “Neutral” rating.
Currently, Akamai Technologies holds a mean price target of $101.61, suggesting a 32.8% upside from current levels. The highest target on record, $140, indicates a potential upside of approximately 83%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein do not necessarily reflect those of Nasdaq, Inc.
