Akamai (AKAM – Research Report), the Technology sector company, was revisited by a Wall Street analyst yesterday. Analyst James Fish from Piper Sandler downgraded the rating on the stock to a Hold and gave it a $100.00 price target.
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James Fish has given his Hold rating due to a combination of factors impacting Akamai’s near-term outlook. The company is undergoing a multi-year transition that introduces uncertainty, particularly following its Q4 results and the introduction of a new 3-5 year framework. Although there are positive developments like progress in Enterprise IaaS and stabilization in go-to-market strategies, several challenges persist.
These challenges include low growth rates, declining margins, and increased capital expenditures. Additionally, the fastest-growing segments, such as Zero Trust Network Access (ZTNA), Infrastructure as a Service (IaaS), and Application Programming Interface (API) services, currently comprise a small portion of the overall business. Management’s optimistic framework, reminiscent of unmet past targets, and lowered financial estimates further contribute to the Hold rating, suggesting that investors might want to wait for more clarity before making significant investment decisions.
Based on the recent corporate insider activity of 79 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of AKAM in relation to earlier this year.