Akami Technologies, Inc. (NASDAQ:AKAM) shares are trading higher on Monday. Oppenheimer analyst Timothy Horan upgraded Akamai from a Perform rating to an Outperform rating and announced a $120 price target.
The Details: Horan cited a stronger market environment and a robust cloud compute and edge compute platform.
In terms of a more attractive market environment, Horan highlighted that the Content Delivery Network (CDN) market has become more attractive due to reduced competition, as the number of players has decreased from six to three following the shutdown of Edgio.
Furthermore, Akamai is acquiring Edgio for approximately $150 million, including transition costs, which the analyst believes will drive revenue and margin growth, with Edgio's revenues estimated to have 80% gross margins and 60% EBITDA margins, improving further next year.
Next, Horan highlighted strong growth in cloud compute, which is becoming an increasingly significant portion of Akamai's revenue. Additionally, AI is driving higher demand for edge compute, while also being leveraged to enhance both security products and internal operations.
Lastly, the analyst said Akamai's cloud and edge compute platforms are positioned to benefit from the growing demand for AI inferencing and the need for AI-driven cybersecurity solutions.
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AKAM Price Action: At the time of publication, Akami shares are moving 4.45% higher at $98.20, according to data from Benzinga Pro.
Image: Courtesy of Akamai Technologies, Inc.