There is no way Akamai Technologies Inc. (AKAM) can keep these numbers up

Akamai Technologies Inc. (NASDAQ: AKAM) stock fell -2.48% on Friday to $83.80 against a previous-day closing price of $85.93. With 1.2 million shares changed hands, the volume of the stock remained lighter than its average volume of 1.49 million shares. During the session, the Software – Infrastructure company that operates in wider Technology sector, reached to the highest price of $87.28 whereas the lowest price it dropped to was $83.78. The 52-week range on AKAM shows that it touched its highest point at $123.25 and its lowest point at $85.85 during that stretch. It currently has a 1-year price target of $110.47. Beta for the stock currently stands at 0.66.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of AKAM was down-trending over the past week, with a drop of -6.25%, but this was down by -11.37% over a month. Three-month performance dropped to -7.29% while six-month performance fell -28.18%. The stock lost -21.65% in the past year, while it has lost -28.40% so far this year. A look at the trailing 12-month EPS for AKAM yields 3.52 with Next year EPS estimates of 5.72. For the next quarter, that number is 1.22. This implies an EPS growth rate of 16.60% for this year and 8.92% for next year. EPS is expected to grow by 10.66% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 16.60%.

Float and Shares Shorts:

At present, 160.04 million AKAM shares are outstanding with a float of 156.26 million shares on hand for trading. On Aug 30, 2022, short shares totaled 10.3 million, which was 6.48% higher than short shares on Jul 28, 2022. In addition to Dr. F. Thomson Leighton as the firm’s Co-Founder, CEO & Director, Mr. Edward J. McGowan serves as its Exec. VP, CFO, Treasurer & Principal Financial Officer.

Institutional Ownership:

Through their ownership of 96.15% of AKAM’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 54.65% of AKAM, in contrast to 42.37% held by mutual funds. Shares owned by individuals account for 2.71%. As the largest shareholder in AKAM with 10.84% of the stake, The Vanguard Group, Inc. holds 17,228,838 shares worth 17,228,838. A second-largest stockholder of AKAM, BlackRock Fund Advisors, holds 10,028,959 shares, controlling over 6.31% of the firm’s shares. Canada Pension Plan Investment Bo is the third largest shareholder in AKAM, holding 7,377,449 shares or 4.64% stake. With a 4.64% stake in AKAM, the Canada Pension Plan is the largest stakeholder. A total of 7,375,000 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.98% of AKAM stock, is the second-largest Mutual Fund holder. It holds 4,741,832 shares valued at 428.09 million. Vanguard Mid Cap Index Fund holds 2.32% of the stake in AKAM, owning 3,680,737 shares worth 332.3 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 29, 2022, AKAM reported revenue of $903.33M and operating income of $182.56M. Over the past year, revenue came in at $3.57B while operating income stood at $749.71M. It generated $119.54M net income for the quarter, which came to $578.15M over the last twelve months. The EBITDA in the recently reported quarter was $333.98M and diluted EPS was $0.74. EBITDA for the full year was $1.37B.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for AKAM since 19 analysts follow the stock currently. There are 8 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 10 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With AKAM analysts setting a high price target of $164.00 and a low target of $90.00, the average target price over the next 12 months is $111.00. Based on these targets, AKAM could surge 95.7% to reach the target high and rise by 7.4% to reach the target low. Reaching the average price target will result in a growth of 32.46% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. AKAM will report FY 2022 earnings on 02/07/2023. Analysts have provided yearly estimates in a range of $5.32 being high and $5.08 being low. For AKAM, this leads to a yearly average estimate of $5.25. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Akamai Technologies Inc. surprised analysts by $0.04 when it reported $1.35 EPS against a consensus estimate of $1.31. The surprise factor in the prior quarter was -$0.03. Based on analyst estimates, the high estimate for the next quarter is $1.25 and the low estimate is $1.18. The average estimate for the next quarter is thus $1.22.

Summary of Insider Activity:

Insiders traded AKAM stock several times over the past three months with 4 Buys and 5 Sells. In these transactions, 985 shares were bought while 5,290 shares were sold. The number of buy transactions has increased to 97 while that of sell transactions has risen to 96 over the past year. The total number of shares bought during that period was 451,272 while 286,980 shares were sold.

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