Earnings Release: Here's Why Analysts Cut Their Akamai Technologies, Inc. (NASDAQ:AKAM) Price Target To US$107

Shareholders in Akamai Technologies, Inc. (NASDAQ:AKAM) had a terrible week, as shares crashed 21% to US$79.58 in the week since its latest yearly results. Results were roughly in line with estimates, with revenues of US$4.0b and statutory earnings per share of US$3.27. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Akamai Technologies

Taking into account the latest results, the most recent consensus for Akamai Technologies from 24 analysts is for revenues of US$4.12b in 2025. If met, it would imply a modest 3.2% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 2.7% to US$3.45. Before this earnings report, the analysts had been forecasting revenues of US$4.26b and earnings per share (EPS) of US$3.99 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 5.5% to US$107. 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$140 per share, while the most bearish prices it at US$72.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Akamai Technologies' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 3.2% growth on an annualised basis. This is compared to a historical growth rate of 6.1% 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 9.3% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Akamai Technologies.

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 said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Akamai Technologies going out to 2027, and you can see them free on our platform here..

It might also be worth considering whether Akamai Technologies' debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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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.