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Why Akamai Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Akamai Technologies (Nasdaq: AKAM  ) have popped by as much as 11% today after the company posted better-than-expected third-quarter earnings.

So what: Revenue rose 23% to $345 million, with adjusted earnings per share of $0.43. Both top and bottom lines bested the market's expectations, and Akamai saw meaningful increases in both gross and EBITDA margins.

Now what: Following the results, numerous analysts have upgraded Akamai. Canaccord Genuity upped Akamai to buy with a $45 price target, while Oppenheimer did the same but now gives Akamai a $50 price target. CEO Paul Sagan said the company's cloud investments have been paying off and the results speak for themselves. This was the fourth consecutive quarter of accelerating revenue growth and higher margins, Sagan added.

Interested in more info on Akamai? Add it to your watchlist by clicking here.

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Comments from our Foolish Readers

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  • Report this Comment On October 25, 2012, at 3:34 PM, 5574tjh wrote:

    What will be interesting is to see that Limelight does.

    Level 3 already laid an egg and is dropping.

    If Limelight does not do will how do we view Akamai's competitors.

    I would say that the only reason they remain so called competition is that analysts say so.

    Cloud and CDN business certainly does the market place Akamai does not have competition in any real sense.

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Akamai Technologie… CAPS Rating: ****