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Here's Why Akamai (AKAM) Stock is a Strong Buy Right Now

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On Jun 8, 2018, Akamai Technologies Inc. (AKAM - Free Report) was upgraded to Zacks Rank #1 (Strong Buy). The upgrade reflects positive earnings estimate revision as well as consistent execution.

Notably, the Zacks Consensus Estimate for 2018 earnings has increased 8.3% to $3.27 per share over the last 60 days. For 2019, the earnings estimate is up 5.3% to $3.76 per share over the same time frame.

Moreover, Akamai beat the Zacks Consensus Estimate for earnings and revenues in each of the trailing four quarters.

The first-quarter 2018 results were impressive. Akamai’s adjusted earnings beat the Zacks Consensus Estimate by 9 cents and increased 21.3% from the year-ago quarter.

Revenues of $668.7 million also topped the consensus mark of $654 million and increased 11.4% on a year-over-year basis. The revenues were towards the top end of management’s guided range of $596-$610 million.
 

 

Cloud Security Solutions Growth: Key Catalyst

We expect Akamai to benefit from solid cloud security solutions growth. In the last reported quarter, the segment revenues were $149 million, up 36% year over year (up 32% adjusted for foreign exchange).

Akamai stated that out of 500 financial institutions it serves, over 400 enterprises use its security solutions, including top 25 U.S. banks and 22 of the top 25 financial institutions in Europe.

Moreover, with the addition of Nominum, it now processes 1.7 trillion domain name system (DNS) queries per day for over 100 million domains.

We believe that strong demand for Kona Site Defender and Prolexic Solutions as well as the new Bot Manager Premier and Nominum Services will continue to drive growth for the cloud security segment.

Other Stocks to Consider

Investors can also consider Baidu (BIDU - Free Report) , Match Group (MTCH - Free Report) and The Trade Desk (TTD - Free Report) from the broader Computer & Technology sector. The stocks sport similar Zacks Rank as of Akamai.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Baidu, Match and The Trade Desk are currently pegged at 21.77%, 12.50% and 22.50%, respectively.

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