Investors in Akamai Technologies, Inc. (NASDAQ:AKAM) had a good week, as its shares rose 2.7% to close at US$99.60 following the release of its yearly results. Results were roughly in line with estimates, with revenues of US$2.9b and statutory earnings per share of US$2.90. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts’ latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Akamai Technologies from 21 analysts is for revenues of US$3.09b in 2020, which is a reasonable 6.9% increase on its sales over the past 12 months. Statutory earnings per share are expected to accumulate 7.6% to US$3.16. Yet prior to the latest earnings, analysts had been forecasting revenues of US$3.08b and earnings per share (EPS) of US$3.08 in 2020. Analysts seem to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 8.8% to US$104, suggesting that higher earnings estimates flow through to the stock’s valuation as well. The consensus price target just an average of individual analyst targets, so – considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Akamai Technologies at US$120 per share, while the most bearish prices it at US$63.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Akamai Technologies shareholders.
Further, we can compare these estimates to past performance, and see how Akamai Technologies forecasts compare to the wider market’s forecast performance. Next year brings more of the same, according to analysts, with revenue forecast to grow 6.9%, in line with its 7.2% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So although Akamai Technologies is expected to maintain its revenue growth rate, it’s forecast to grow slower than the wider market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Akamai Technologies’s earnings potential next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Akamai Technologies’s revenues are expected to perform worse than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Akamai Technologies going out to 2024, and you can see them free on our platform here..
You can also view our analysis of Akamai Technologies’s balance sheet, and whether we think Akamai Technologies is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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