Akamai (AKAM) investors are finally getting a breather: Shares of the Internet content distribution firm are up 7% this morning — trading around $30.25 — after Piper Jaffray upgraded the stock to “buy” and Citigroup reissued its “buy” rating yesterday. Shares had tumbled 16% from Feb. 7, the day after Akamai posted stellar Q4 results, until yesterday’s close.
Why buy Akamai? Piper analyst Aaron Kessler says, in a note summarized by Barron’s editor Eric Savitz, that the company should have minimal impact from the slowing economy. Meanwhile, Kessler expects “volume bit growth” — the amount of data Akamai customers push across its network — to stay strong (and possibly speed up); pricing and gross margin declines to moderate this year; and that application acceleration — different from Akamai’s content delivery business — will kick in a greater amount of revenue.
Kessler also loves Akamai’s patent portfolio — it recently won a patent suit against rival Limelight Networks (LLNW), currently in appeals — and its valuation.
Meanwhile, Citi analyst John Reilly Walsh offers some explanations for Akamai’s recent dip, also summarized by Savitz: Concerns about weak online ad and e-commerce business, highlighed by a recent comScore report showing anemic paid click growth at Google (GOOG), Akamai’s exposure to auction-rate securities, and concerns about Q1.
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