Friday, March 25, 2011

Akamai (AKAM) Rocks on Upgrade

Shares of Akamai (NASDAQ:AKAM) are trading higher today after Piper Jaffray analyst Michael Olson boosted his rating on the company from "Neutral" to "Overweight."

Olson said, “There will be many competing online video services and ecommerce sites, but Akamai serves as a common denominator that benefits from market growth, regardless of which of those services or sites gain share. While there are constant pricing and competitive pressures in the space, this is balanced with a significant opportunity to benefit from the tailwinds of growth in online video and ecommerce.”

“We believe CDN pricing is declining at relatively normal rates, but Akamai renewed deals with 8 of the top 10 CDN customers in the last few months, which results in a step down in pricing, as is always the case with contract renewals,” he added. “The reason these renewals were lumped together in the last few months is many usage based contracts reached the commitment levels required to trigger a renewal, which combined with typical periodic renewals of time based contracts, resulted in more renewals than normal in one quarter.”

Akamai was trading at $38.72, gaining $0.96, or 2.54 percent, as of 1:08 PM EDT. Olson has a price target of $45 on them.

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