Akamai Technologies (AKAM) has "limited" short-term growth opportunities, however, the company's "muted" outlook suggests that this year will likely be one of transition, BofA Securities said in a note Friday.
Analysts, including Madeline Brooks, said they see restricted near-term catalysts as the company shifts from slower-growing areas like web security and legacy computing to faster-growing areas like Application Programming Interface security and Cloud Infrastructure Services. They added that while they remain optimistic about the long-term prospects, transitions take time.
The company's "muted" guidance for 2025, with a growth forecast of 3%, compared to the consensus estimate of 7%, suggests this will be a year of multiple transitions, the analysts said.
Akamai's new long-term targets do not predict a return to double-digit growth until 2029 at the earliest, compared to the consensus forecast of 2027, the analysts said, adding that while promising, new growth drives only account for 11% of revenues, which we forecast to grow to only 25% of revenues by 2027, "implying revenues will continue to feel the effects of decelerating growth in the near to mid-term," BofA analysts said.
BofA downgraded Akamai to neutral from buy and cut its price target to $100 from $125. Shares of the company fell past 15% in recent trading.
Price: 83.19, Change: -14.84, Percent Change: -15.14
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