Is Akamai Technologies (AKAM) Poised to Beat Earnings? - Analyst Blog

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Akamai Technologies, Inc. ( AKAM ) is set to report second quarter 2014 results on Jul 30. Last quarter, it posted a 6.82% positive surprise. The company has posted an average positive earnings surprise of 2.74% over the past four quarters.  

Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

We believe that strong demand for cloud infrastructure solutions, security, mobile products and online video will drive top-line growth. Akamai's partnership with the likes of AT&T, International Business Machines, Orange, Swisscom, Korea Telecom and Türk Telekom is expected to boost top-line growth, going forward.

Further, Akamai's partnerships with the likes of Cisco and Qualcomm will help the company to expand successfully in the cybersecurity market.

Moreover, Akamai's superior content delivery platform has been selected by the likes of Apple due to its ability to provide high-quality service at a much lower rate compared to its peers. Additionally, the company's dominance in the web application business is expected to be a significant growth catalyst, going ahead.  

However, intense competition has kept pricing under tremendous pressure, which is a significant headwind, going forward. In order to differentiate its products, Akamai is significantly investing in R&D and is also expanding its sales force through new appointments, which will hurt margins in the rest of 2014.

Earnings Whispers?

Our proven model does not conclusively show that Akamai is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 46 cents. Hence, the difference is of 0.00%.

Zacks Rank #3 (Hold): Akamai's Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks #4 and #5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Synaptics Inc. ( SYNA ), Earnings ESP of +4.07% and a Zacks Rank #1 (Strong Buy).

Western Digital Corporation ( WDC ), Earnings ESP of +4.02% and a Zacks Rank #2 (Buy).

Iron Mountain Inc. ( IRM ), Earnings ESP of +12.82% and a Zacks Rank #2 (Buy).


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WESTERN DIGITAL (WDC): Free Stock Analysis Report

AKAMAI TECH (AKAM): Free Stock Analysis Report

IRON MOUNTAIN (IRM): Free Stock Analysis Report

SYNAPTICS INC (SYNA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: WDC , AKAM , IRM , SYNA

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