Why Akamai (AKAM) Was Upgraded

NEW YORK (TheStreet) -- Akamai (AKAM) was upgraded to "neutral" from "underperform" by Credit Suisse Thursday.

Akamai jumped 20.1% to $56.96 in morning trading.

The analyst firm set its price target for the Internet server provider at $47.50, above its Wednesday closing price of $47.42. The firm believes Akamai should continue to deliver solid growth across the board.

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Separately, TheStreet Ratings team rates AKAMAI TECHNOLOGIES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate AKAMAI TECHNOLOGIES INC (AKAM) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • AKAMAI TECHNOLOGIES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AKAMAI TECHNOLOGIES INC increased its bottom line by earning $1.13 versus $1.07 in the prior year. This year, the market expects an improvement in earnings ($1.99 versus $1.13).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 65.4% when compared to the same quarter one year prior, rising from $48.23 million to $79.76 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 17.2%. Since the same quarter one year prior, revenues rose by 14.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • AKAM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.88, which clearly demonstrates the ability to cover short-term cash needs.
  • You can view the full analysis from the report here: AKAM Ratings Report

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