Markets

Akamai (AKAM) Shares Rally on Elliott Management Stake Buy

Shares of Akamai Technologies IncAKAM scaled higher after billionaire activist investor Paul Singer's Elliott Management Corp. hedge fund revealed a 6.5% stake in the company in a regulatory filing yesterday.

The hedge fund stated that it is looking to speak with Akamai's board about this transaction and opportunities to improve the company's profit margins and boost shareholder value.

Elliott Management's stake purchase in Akamai was greeted positively by investors. Akamai's shares shot up more than 13% in the trading session yesterday. The stock closed the day at $65.67 per share.

According to the analysts at Oppenheimer, "Elliott has a strong track record of working with management teams to improve performance over the long term." Akamai's price target was increased to $75 from $55 by Brad Zelnick, an analyst at Credit Suisse.

Notably, Akamai's shares have lost 1.5% of its value year to date versus the 26.9% increase of its industry .

Declining revenue contribution from large customers in the Internet Platform group namely, Amazon.com , Apple, Facebook, Google, Microsoft and Netflix due to their do-it-yourself ("DIY") initiatives remains a concern for the company.

Declining revenue contribution from large customers in the Internet Platform group namely, Amazon.com AMZN , Apple, Facebook, Google, Microsoft and Netflix due to their do-it-yourself ("DIY") initiatives remains a concern for the company.

Further, intensifying competition continues to weaken Akamai's market share. Loss of large customers in the content delivery network ("CDN") space is expected to have a negative impact on the company's top-line in the near term.

However, we believe that rising demand for cloud infrastructure solutions, security, mobile products and online video as well as adoption of cloud services on a large scale by data centers pose significant growth opportunity for Akamai.

Zacks Rank & Key Picks

Currently, Akamai carries a Zacks Rank #3 (Hold).

Few better-ranked stocks in the technology sector worth considering are NVIDIA Corporation NVDA and Intel Corporation INTC , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Long-term earnings growth for NVIDIA and Intel are currently pegged at 10.3% and 8.4%, respectively.

Zacks Editor-in-Chief Goes ""All In"" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Download it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Akamai Technologies, Inc. (AKAM): Free Stock Analysis Report

Intel Corporation (INTC): Free Stock Analysis Report

NVIDIA Corporation (NVDA): Free Stock Analysis Report

To read this article on Zacks.com click here.

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


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

In This Story

AMZN NVDA INTC AKAM

Other Topics

Stocks

Latest Markets Videos