Karishma Vanjani

Akamai Technologies stock took a hit Friday morning as investors likely remain unimpressed with its near-term story.

On Thursday, the cloud services company Akamai posted adjusted earnings of $1.66 a share for the fourth quarter on revenue of $1.02 billion. Earnings were ahead of the FactSet consensus of $1.52 a share, while revenue was in line.

The outlook is weighing on shares more. Akamai is a major player in the delivery of internet content, but the segment has seen large revenue declines due to a broader slowdown in internet traffic. Akamai has been shifting revenue to its security and computing segment.

Akamai projected 2025 revenue between $4 billion and $4.20 billion, below the average Wall Street estimate of $4.26 billion.

It expects a year-over-year decline of 10% in delivery revenue in 2025, better than the 15% fall in 2024 and declines seen in prior years as more customers have been willing to sign multiyear contracts with predictable pricing.

It also established ambitious three- to five-year goals that included an inorganic total revenue growth of over 10%, substantially above the 2.7% growth expected in 2025 at the midpoint.

J.P. Morgan has a Sell rating on the stock. "Our overall conclusion is that while we laud the long-term targets, which will be commendable if achieved, growth in the near-term remains challenged and below where Akamai and investors want it to be," the firm said, lowering its target for price to $72 from $76.

Guggenheim's analyst John DiFucci titled his note 'Great Story, But Need to Execute.' DiFucci has a Buy rating on the stock and encourages investors to remain patient. He expects the stock to go to $133.

The stock was down 9.3% in premarket trading to $88.90.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com

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February 21, 2025 09:14 ET (14:14 GMT)

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