Market signals confidence in Akamai

The content delivery company expects to deliver for investors when it reports earnings this week.

By Benzinga Feb 4, 2013 3:55PM
 Couple with laptop copyright CorbisBy Ken Shreve 

Stocks with solid fundamentals showing bullish price action ahead of earnings always bear watching. Akamai Technologies (AKAM) is in that boat now.


Earnings are due Wednesday after the close. A bullish chart doesn't always guarantee success for a stock, but recent price and volume trends in Akamai are sending a clear message for now: The market's expecting a solid quarter.


The Thomson Reuters consensus estimate is for earnings of $0.50 a share, up 11% from a year ago. Sales are seen rising 18% to $381.1 million. Akamai isn't growing as fast as it once was, but demand remains strong for the company's products and services. Over the past three quarters, sales growth has accelerated from 16% to 20% to 23%.


Akamai provides content delivery network services to media and entertainment companies. Its technology helps websites speed up the delivery of video and other content to viewers.


On Dec. 6, shares popped 10% after the company announced a strategic alliance with AT&T (T) to distribute content delivery network (CDN) solutions to AT&T customers.


The company also continues to make inroads in new business areas like Web security, network carrier products and cloud computing.


Akamai used to be a favorite of short sellers but not so much anymore. Short interest has been steadily declining in the stock. As of January 15, 5.6 million shares were held short, down quite a bit from 8.7 million shares at the end of October.


Wall Street firms are flush with cash and feeling more confident about the economy, which means 2013 could be a year of increased merger and acquisition activity. Akamai is no stranger to takeover speculation. Chatter has quieted down in recent months, but Google (GOOG), IBM (IBM) and Verizon Communications (VZ) have been mentioned in the past as possible suitors.


Major averages remain in uptrends so it makes sense to target fundamentally and technically healthy stocks like Akamai. Its current technical setup brings a breakout over $42.52 into play. Selling pressure in the stock has been muted and Akamai recently showed good supporting action at its 10-week moving average.


Shares of Akamai outperformed Friday, rising 2.7% to $41.81. There was some conviction behind the buying as volume totaled 2.8 million shares. It normally trades about 2.5 million shares a day. The stock pared some of those gains Monday and was down almost 1% in afternoon trading. 


Stock chart: 


More from Benzinga 
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

114
114 rated 1
278
278 rated 2
474
474 rated 3
641
641 rated 4
639
639 rated 5
663
663 rated 6
640
640 rated 7
499
499 rated 8
284
284 rated 9
122
122 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
COPCONOCOPHILLIPS9
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
KOGKODIAK OIL & GAS Corp9
CVXCHEVRON CORPORATION8
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.