Akamai ( AKAM - Get Report), which operates in the content delivery and value-added solutions business, recently reported its third-quarter earnings.

Akamai makes money delivering Web content for its customers and by providing value added service like dynamic site acceleration and advertising decision solutions. In this segment is competes with Level 3 ( LVLT), AT&T ( T - Get Report) and Limelight ( LLNW - Get Report).

The company is seeing growth across all of its business verticals with the highest growth observed in the public sector. While revenues from the e-commerce and media verticals have registered growth of close to 20% in the first 9 months of 2010 compared to same period last year, the public sector has registered a growth of over 32%. This has been driven by an increase in revenue per customer as well as increased customer count.

While our price estimate of $31.11 is well below the market price, we believe there is upside risk to our forecasts in light of the structural tailwinds in its core businesses.

The majority of the public sector business for Akamai comes from the U.S., and within the U.S. from the federal sector. Akamai's customers include both government-to-consumer (G2C) agencies and military.

There is still also plenty of growth for the company when it comes to the state sector. In its earnings transcript, Akamai noted that states have generally not invested in services to improve process efficiency and delivery creating an opportunity for Akamai.

Despite growth in the public sector vertical, we estimate that public sector (government & NGO) constitutes about 4% to Akamai's stock. This is because it has a significantly fewer customers when compared to other verticals like online shopping and media.

We estimate that Akamai will have close to 100 public sector customers by the end of 2010, and we expect this figure to exceed 130 by the end of our forecast period. While the uptick in public sector growth is encouraging, we note that there is limited upside. If Akamai gained 200 customers in this segment in the coming years, this implies about 2% upside to our estimates.

You can see the complete $31.11 Trefis price estimate for Akamai's stock here

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.