What happened
Shares of Limelight Networks (EGIO -5.28%) jumped as much as 12.7% higher on Monday morning thanks to a bullish analyst report. By 11 a.m. ET, the content delivery network (CDN) specialist's stock had cooled down somewhat to a 9% gain.
So what
According to Raymond James analyst Frank Louthan, Limelight is executing "a solid transition" to boost the company's product portfolio and expand the addressable target market. Given it has a year or so to continue this expansion, Louthan expects Limelight to report higher sales while the stock should earn higher valuation ratios. All told, the analyst sees this stock as a strong buy at current prices. Louthan's price target of $5 per share represents a 40% upside compared with last Friday's closing price.
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Now what
Recently appointed CEO Bob Lyons is a big upgrade in Louthan's view, and the acquisition of edge computing expert Layer0 should fuel a meaningful chunk of the upcoming growth prospects.
I agree that Limelight's decision to lean into the edge computing market was wise, giving the company a leg up on many CDN alternatives. Today's enthusiastic market reaction to Louthan's on-point analysis makes perfect sense. The stock also has plenty of room to run higher, trading 37% below its 52-week highs.
