Morgan Stanley has conveyed an optimistic outlook for Akamai Technologies, reflecting a significant reassessment of the cybersecurity and cloud computing firm. The bank has upgraded the stock from underweight to overweight, signaling strong confidence in its future performance. Analyst Sanjit Singh has also revised his price target for Akamai, raising it from $83 to $115, which denotes a potential upside of approximately 31%.
In his analysis, Singh noted that Akamai’s shares, currently trading at about 11 times earnings per share for the upcoming 2027 calendar year, present an appealing value proposition. He pointed out that investors may have “underpriced” the company’s potential for improving growth trends.
Singh emphasized that Akamai appears to be nearing a significant turning point in its long-term business model, which he believes will facilitate improved top-line growth and accelerated earnings per share (EPS) growth in the coming years. Despite experiencing sluggish revenue growth of approximately 4% to 5% since the pandemic began, he predicts that several key drivers could spur better performance moving forward.
Crucially, Singh highlighted the stabilization of Akamai’s content delivery business, the continued growth in its security sector, and the expectation of high-teens growth in its compute business as pivotal factors that may enhance revenue. Additionally, he mentioned the growing contributions from Akamai’s public cloud unit, Linode, alongside the recently launched Akamai Inference Cloud—an NVIDIA GPU-as-a-Service offering—as vital potential catalysts for growth and overall valuation re-rating.
Following the double upgrade by Morgan Stanley, Akamai shares saw a more than 4% increase on Monday, despite experiencing a 1% decline over the past year. The analyst’s insights suggest a renewed investor interest in Akamai, marking a possible shift in sentiment towards more favorable prospects for the company’s future growth trajectory.
