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On Feb 11, 2014, Zacks Investment Research upgraded Akamai Technologies (AKAM - Analyst Report) to a Zacks Rank #1 (Strong Buy). The upgrade came on the back of positive estimate revisions over the last 30 days. Akamai also delivered positive earnings surprises in the last four quarters with an average beat of 6.2%.

Why the Upgrade?

Upbeat fourth quarter results contributed to the upgrade. The outperformance was driven by a stronger-than-expected growth in revenues and earnings per share. Also, the speculation that had been going on for some time regarding whether Apple (AAPL - Analyst Report) would develop a CDN of its own has been put to rest as per Bloomberg reports.

Akamai reported fourth quarter earnings of 55 cents per share, which increased 10.0% on both year-over-year and quarter-over-quarter basis. Revenues jumped 15.4% year over year and 10.2% quarter over quarter to $436.0 million, well ahead of the Zacks Consensus Estimate of $422.0 million.

Revenues were higher than management’s guided range of $412.0 to $430.0 million. The strong growth in revenues was primarily driven by robust performance of most of the categories and regions.

Akamai expects revenues for the first quarter of 2014 to be in the range of $426.0 million and $440.0 million. The company expects gross margin (excluding stock-based compensation and depreciation and amortization) to remain flat sequentially at 78.0%. Operating expenses are projected to be in the range of $145.0 to $150.0 million.

Earnings are expected to be between 51 cents and 55 cents per share, including tax charge of $48.0 to $52.0 million. Akamai forecasts capital expenditure to be in the range of $72.0 to $77.0 million for the first quarter.

Over the last 30 days, Akamai witnessed three upward revisions for the current quarter and four upward revisions for fiscal 2014. The Zacks Consensus Estimate for the current quarter went up by a penny to 41 cents per share while the same for fiscal 2014 went up by 4 cents to $1.80 per share.

The long-term expected earnings growth rate for Akamai is 13.9%.

Other Stocks to Consider:

Other players in the industry, which look attractive at current levels include Baidu Inc. (BIDU - Snapshot Report) and Autodesk Inc. (ADSK - Analyst Report), both with a Zacks Rank #1 (Strong Buy).

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