Shareholders might have noticed that Akamai Technologies, Inc. (NASDAQ:AKAM) filed its first-quarter result this time last week. The early response was not positive, with shares down 6.7% to US$95.86 in the past week. Akamai Technologies reported US$764m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.75 beat expectations, being 2.0% higher than what the analysts expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Akamai Technologies from 21 analysts is for revenues of US$3.11b in 2020 which, if met, would be a modest 5.3% increase on its sales over the past 12 months. Statutory earnings per share are predicted to swell 11% to US$3.37. In the lead-up to this report, the analysts had been modelling revenues of US$3.09b and earnings per share (EPS) of US$3.24 in 2020. So the consensus seems to have become somewhat more optimistic on Akamai Technologies' earnings potential following these results.
The consensus price target was unchanged at US$110, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Akamai Technologies at US$130 per share, while the most bearish prices it at US$70.00. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Akamai Technologies' past performance and to peers in the same industry. We would highlight that Akamai Technologies' revenue growth is expected to slow, with forecast 5.3% increase next year well below the historical 7.1%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. 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 here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Akamai Technologies following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. 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..
Plus, you should also learn about the 1 warning sign we've spotted with Akamai Technologies .
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