Akamai Technologies, Inc. (NASDAQ:AKAM)

CAPS Rating: 4 out of 5

The Company provides services for accelerating and improving the delivery of content and applications over the Internet from live and on-demand streaming videos to conventional content on web pages to tools that help people transact business.

Recs

1
Player Avatar ROEoutshinesGOLD (98.63) Submitted: 7/16/2013 7:39:40 PM : Outperform Start Price: $35.08 AKAM Score: +19.15

At the time this pick was made, AKAM was rated 5***** STARs by the S&P.
The positive pick was made on 03/26/13
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Since then:

April 25, 2013 :

S&P DOWNGRADES OPINION ON SHARES OF AKAMAI TO BUY FROM STRONG BUY, ON VALUATION
(AKAM 43.55 ****) :

We are raising our 12-month target price to $50 to $45, based on revised DCF analysis.
We are also increasing our EPS estimates for '13 to $1.59 from $1.43, '14 to $1.85 from $1.68, and '15 to $2.10 from $2.00.

AKAM posted Q1 EPS of $0.39, vs. $0.24, $0.06 above our forecast, reflecting revenues and a gross margin that were higher than we projected.
The Q1 revenue increase of 15% would have been 19% with adjustments for a recent divestiture and foreign exchange.

In addition, AKAM continues to focus on expense management, despite making growth investments.

/S. Kessler
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May 20, 2013 :

S&P DOWNGRADES OPINION ON SHARES OF AKAMAI TO HOLD FROM BUY, ON VALUATION
(AKAM 47.84 ***) :

AKAM shares rose 42% YTD through Friday, May 17 compared with a 7% increase in the S&P 500 and a 13% average gain in the Internet stocks within our coverage universe.
AKAM is within 4% of our 12-month target price of $50.

We believe AKAM is well-positioned to benefit from major trends that are driving growth, including digitally distributed media, "cloud computing," cyber attacks, and mobile.

However, we are not sure whether recent traffic growth momentum will continue, especially given unfavorable summer seasonality, and we expect AKAM to continue hiring.

/S. Kessler
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The Market averages a ROE of 12.89%
(source: see the bottom right of the list, linked to below) :

http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/roe.html

AKAM's ROE is consistently below the 12.89% average. Going back to 2006 the average ROE for AKAM is hovering around 9%.

I prefer companies that deliver consistently high return on equity - above 20% is enticing, especially if no debt is used in achieving such results.

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