JPMorgan Chase & Co. (NYSE:JPM) analysts released an incredibly positive report on Akamai Technologies Inc. (NASDAQ:AKAM) this morning, after the company released a stellar earnings report that showed it was in rude health. The new reports puts a $52 price target on the company. Shares in the firm stood at $43 today.
After the market closed on Wednesday, April 24, Akamai Technologies Inc. (NASDAQ:AKAM) announced that it had earned 51 cents per share in the first three months of 2013, on revenue of $368 million. In the run up to the earnings announcement, analysts were expecting the company to report earnings of 47 cents per share on revenue of $358 million.
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The JPMorgan Chase & Co. (NYSE:JPM) report upgrades the stock on multiple factors, including the acceleration of growth in the company’s media business, an expansion in the company’s sales force, and an analysis pointing to the probability that Akamai Technologies Inc. (NASDAQ:AKAM) can maintain its gross margins at their current level.
On the media front, in the first three months of 2013, the company managed to increase traffic in all four of its major segments. In order of performance, JPMorgan Chase & Co. (NYSE:JPM) lists these as social media, video delivery, software downloading and video games. Akamai has, according to the analysts, managed to turn its media segment from a weakness in Q4 2012 into a strength in Q1 2013.
Akamia Technologies Inc. (NASDAQ:AKAM) is formidable in terms of its gross margin, and JPMorgan thinks that it can maintain the metric at its current phenomenal levels. The company’s gross margin in the first three months of 2013 was 76.4 percent, a number that looks like a typo.
If Akamai can manage to keep up growth in its media segment, improve sales by boosting that department, and maintain gross margins at their current levels, the analysts think that the company can boost its share price to $52 in the next twelve months. Akamia Technologies Inc. (NASDAQ:AKAM) hasn’t seen shares at that level since mid 2010.
The $52 price target is based on a P/E of 23, a number that JPMorgan thinks is the basis for the company’s business. Today shares were trading at a P/E of 38, implying optimism among shareholders.
In the first quarter of 2012, Akamai Technologies Inc. (NASDAQ:AKAM) earned 41 cents per share on revenue of $319 million. Since the start of the year shares in the company have risen by just 5 percent, after its earnings report for the last three months of 2012 showed weak guidance for the first quarter of 2013.