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Will Flat Top-Line Trajectory Dent Akamai (AKAM) Q4 Earnings?

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Akamai Technologies, Inc. (AKAM - Free Report) is scheduled to report fourth-quarter 2022 results on Feb 14, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 2.4%. It pulled off a trailing four-quarter earnings surprise of 2.1%, on average.

The Cambridge, MA-based company is expected to have recorded flat revenues year over year, despite growth in its security business. Growing demand for cloud infrastructure solutions, mobile products and online video amid high data traffic is favoring its prospects but is likely to have been offset by a challenging macroeconomic environment.

Factors at Play

During the fourth quarter, Akamai collaborated with NESN to offer its media delivery solutions to help live stream all 2022-23 Bruins home games and future Red Sox home games in 4K/HDR through the NESN 360 app. NESN is the first regional sports network in the United States to live stream Major League Baseball and National Hockey League games in 4K/HDR natively via a streaming app. This is likely to be reflected in the upcoming results.

Akamai continued to unveil cybersecurity tools to mitigate cyber risks and block malicious files uploaded to web apps and APIs (Application Programming Interfaces), which are a set of definitions and protocols for building and integrating application software. During the to-be-reported quarter, it enhanced its DDoS protection platform (Prolexic) with a global rollout of new, fully software-defined scrubbing centers, which will extend its dedicated defense capacity to 20 Tbps and accelerate future product innovations. The move enables Akamai Prolexic to defend customers from the largest multi-terabit attacks and provide better performance and reliability. Such state-of-the-art products are likely to have aided its performance in the quarter.

However, challenging market conditions and business uncertainty are likely to have a detrimental effect on its revenues as customers tend to be more cautious in their investments.

The Zacks Consensus Estimate for revenues is pegged at $903 million, flat with the year-ago quarter’s reported figure of $905 million. For the fourth quarter of 2022, Akamai expects revenues between $890 million and $915 million. The consensus estimate for adjusted earnings per share is pegged at $1.27, suggesting a decrease from $1.49 reported a year ago.

Earnings Whispers

Our proven model does not predict an earnings beat for Akamai in the fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +4.35%, with the former pegged at $1.32 and the latter at $1.27. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 

Akamai Technologies, Inc. Price and EPS Surprise

Akamai Technologies, Inc. Price and EPS Surprise

Akamai Technologies, Inc. price-eps-surprise | Akamai Technologies, Inc. Quote

Zacks Rank: Akamai has a Zacks Rank #4 (Sell).

 

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Check Point Software Technologies Ltd. (CHKP - Free Report) is set to release quarterly numbers on Feb 13. It has an Earnings ESP of +1.22% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Applied Materials, Inc. (AMAT - Free Report) is +0.42% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Feb 16.

The Earnings ESP for Cambium Networks Corporation (CMBM - Free Report) is +2.46% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 16.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar

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