Akamai Fundamentals Remain Solid, Competitive Landscape May Ease

3/24 - "We believe fundamentals remains solid for Akamai and expect Q1 results to at least meet our forecasts...we believe traffic delivered on Akamai’s network is up roughly 4.9% sequentially in Q1. This compares favorably to our Q1 revenue growth forecast of 3.1%. In addition, our checks indicate that while pricing continues to decline on a year-over-year basis, the rate seems to have eased in Q4 and Q1, and pricing should be relatively stable on a sequential basis in Q1."

"We believe Akamai’s victory in patent litigation against Limelight could improve the competitive landscape. Beginning in Q2, Akamai could see slightly improved pricing and a higher customer win rate. On the margin, Akamai could also benefit from Internap’s challenges in its CDN business."

"AKAM trades at roughly 15x our 2009 EPS estimate of $2.00. This is a new all-time trough and a discount to its long-term growth rate of roughly 20% to 25%...Our 12-month price target of $45 is based on a target P/E multiple of roughly 22x our 2009 EPS estimate of $2.00."