What happened

Shares of Limelight Networks (NASDAQ:LLNW) rose as much as 11.9% on Monday morning, following a rosy research note from analyst firm Craig-Hallum. By noon EDT, the stock had cooled down to a 9.1% increase over Friday's closing price.

So what

Craig-Hallum started coverage of the content delivery network operator with a buy rating and a price target of $6 per share. That target price sits 37% above Friday's share price and 26% beyond today's boosted levels.

Analyst Jeff Van Rhee argued that the stock is "disconnected from fundamentals" on the heels of a 28% sell-off between May and August.

A blue Ethernet network cable, looped around to form a simple cloud shape.

Image source: Getty Images.

Now what

Turning away from its old deep-discount pricing strategy, Limelight has a newfound focus on higher-margin contracts and stronger service quality that has unlocked modest revenue growth and positive earnings in recent quarters. The bottom-line trajectory should continue to rise, as the company recently sent the final payment of a multiyear legal settlement with larger rival Akamai Technologies (NASDAQ:AKAM).

It's not surprising to see Limelight's share price rising on a gentle reminder that the company's business might deserve a premium valuation.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.