Earnings Beat: Akamai Technologies, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Akamai Technologies, Inc. (NASDAQ:AKAM) shareholders are probably feeling a little disappointed, since its shares fell 8.5% to US$91.19 in the week after its latest quarterly results. It looks like a credible result overall - although revenues of US$987m were in line with what the analysts predicted, Akamai Technologies surprised by delivering a statutory profit of US$1.16 per share, a notable 16% above expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Akamai Technologies

Taking into account the latest results, the current consensus from Akamai Technologies' 22 analysts is for revenues of US$3.99b in 2024. This would reflect a modest 2.7% increase on its revenue over the past 12 months. Statutory per share are forecast to be US$4.16, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.08b and earnings per share (EPS) of US$4.35 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.8% to US$117. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Akamai Technologies at US$150 per share, while the most bearish prices it at US$81.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Akamai Technologies' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.7% growth on an annualised basis. This is compared to a historical growth rate of 6.8% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.2% annually. Factoring in the forecast slowdown in growth, it seems obvious that Akamai Technologies is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Akamai Technologies' future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Akamai Technologies. Long-term earnings power is much more important than next year's profits. We have forecasts for Akamai Technologies going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Akamai Technologies that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.