AKAM : NASDAQ : US$54.53
Akamai provides content delivery and cloud
infrastructure services for accelerating and improving the
delivery of content and applications over the Internet,
ranging from live and on-demand streaming videos to
conventional web content, to c-commerce tools. The
company is headquartered in Cambridge, Massachusetts
Telecommunications — Telecommunications
STRONG Q1/14; INCREASING ESTIMATES; REITERATE BUY
Akamai once again managed to produce yet
another quarter of above-expectations growth and margins with a
solid outlook for Q2/14. Even though the company has reiterated
its H2/14 margin guidance for 40%-42%, we note they have
consistently beat their margin forecast for the past six quarters.
Strong volume growth and reported traction in the security
business should continue to provide investors with confidence that
the company will continue to produce solid double-digit top-line
growth with improving margins.
Managing expectations – delivering results – As has been the
case with the company for the past six quarters, guidance
beyond the next quarter was once again muted with the
expectation for margins to return to 40%-42%. Q2/14 revenue
estimates call for $464-478mm with slightly lower margins.
Volumes trends remain strong – Although we had speculated
that recent traffic trends were supported by continued Internet
video growth, the strength appeared equally strong from
software downloads as well as gaming.
Reasonable valuation relative to history – Currently priced at
8.8x 2015E EBITDA, we find the stock to be attractively
valued, especially given accelerating growth trends