Akamai Technologies, Inc. (NASDAQ:AKAM) shareholders are probably feeling a little disappointed, since its shares fell 8.5% to US$91.19 in the week after its latest quarterly results. It looks like a credible result overall - although revenues of US$987m were in line with what the analysts predicted, Akamai Technologies surprised by delivering a statutory profit of US$1.16 per share, a notable 16% above expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Akamai Technologies after the latest results.
Following the latest results, Akamai Technologies' 22 analysts are now forecasting revenues of US$3.99b in 2024. This would be a satisfactory 2.7% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be US$4.16, approximately in line with the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$4.08b and earnings per share (EPS) of US$4.35 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
The consensus price target fell 7.8% to US$117, with the weaker earnings outlook clearly leading valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Akamai Technologies at US$150 per share, while the most bearish prices it at US$81.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Akamai Technologies' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.7% growth on an annualised basis. This is compared to a historical growth rate of 6.8% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Akamai Technologies is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Akamai Technologies. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Akamai Technologies' future valuation.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Akamai Technologies analysts - going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Akamai Technologies has 2 warning signs we think you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.