What happened
Shares of Limelight Networks (EGIO -8.56%) 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.
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 (AKAM 0.42%).
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.
