Sell Akamai Technologies (NSDQ: AKAM) Lost Confidence on Near-Term Earnings

By Linda McDonough • October 11, 2017

Sell Akamai Technologies (NSDQ: AKAM) for a minor 1% loss.

Akamai issued a press release today detailing its acquisition of private enterprise security company Nominum. Buried in the bottom of the press release is management’s guidance for margins in the mid-30 percent range. Prior guidance on the second quarter call was for margins to fall in the mid to high-30 percent range.

While this may sound like an issue of semantics, Akamai has reported two disappointing quarters in a row and my instinct is that this is the company’s first step to walking guidance down yet again.

Profit Catalyst Alert is down slightly in the stock since our original recommendation on June 17. 2017. I have lost confidence in the company’s ability to turn around earnings in the near term.

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Greg

10/11/17 ‐ 4:57pm ET October 11, 2017 at 4:57pm ET

Hi Linda,

Given what you’re saying I was thinking about possibly buying some Puts leading up to, and possibly holding some through earnings. What’s your near term target on the stock price?

Thank you

Linda McDonough

10/12/17 ‐ 11:49am ET October 12, 2017 at 11:49am ET

Hi Greg,

As a publisher, we are prohibited from giving personalized advice so I can only reply with a general comment when I have not recommended a specific position.

Certainly, I think the stock will go lower if estimates are being lowered. I do not have a short-term target but can say the stock is pretty expensive trading at 19 times 2018 estimates.

The company reports its third quarter on October 24th. While I don’t have confidence in being long the stock, I need to do more work to consider the puts.

Best,
Linda

Greg

10/12/17 ‐ 12:50pm ET October 12, 2017 at 12:50pm ET

Thank you Linda! Much appreciated.

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About The Author

Linda McDonough

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Linda McDonough is a veteran hedge fund analyst who loves to break down company financial statements and identify market inefficiencies to uncover big opportunities. She believes in a boots-on-the-ground approach that includes surveying customers, interviewing company executives, or doing whatever it takes to see what others don't.

She's now brought her experience as a hedge fund analyst to subscribers of her Profit Catalyst Alert service. Her system identifies small- and mid-cap stocks that are about to move due to catalytic events that few others can identify...until it's too late. These events often times result in massive gains for her followers.