Akamai stock on Thursday
Akamai Technologies (AKAM) stock fell 5% on Thursday, October 4, and closed at $66.32. It’s currently trading 34% above its 52-week low of $49.59 and 20% below its 52-week high of $83.08.
The stock has risen 2% in 2018 and 31% in the last 12 months. It has generated absolute returns of -9% in the last three years and 30.6% in the last five years. It has significantly underperformed the broader markets.
The S&P 500 (SPY) has risen 10% in 2018, 57% in the last three years, and 91% in the last five years. The Invesco QQQ ETF (QQQ) has risen 18% in 2018, 80% in the last three years, and 145% in the last five years.
Revenue and earnings growth estimates
Analysts expect Akamai’s revenue to increase 7.8% to $2.7 billion in 2018 and 8.3% to $2.92 billion in 2019. Its EPS is expected to rise 27.9% in 2018, 13.4% in 2019, and at a CAGR (compound annual growth rate) of 34.7% over the next five years.
Akamai has a forward 2018 PE ratio of 40.7x and a forward 2019 PE ratio of 28.9x. That might seem expensive given its expected revenue growth rate.
AKAM stock has significant upside potential compared to target estimates
There are 26 analysts covering Akamai. Eleven have recommended a “buy,” 13 have recommended a “hold,” and two have recommended a “sell.” The average 12-month target estimate for the stock is $83.58. That indicates that Akamai is trading at a discount of 26% to analysts’ target estimates.