Akamai: Zacks’ Bear of the Day Play

Today’s Bear of the Day is a Zacks Rank #5 (Strong Sell) that also has some relatively low Zacks Style Scores. Growth comes in at a “C” while Value and Momentum each carry a “D.” This tells me we’ve got earnings estimates that have been coming in on a downtrend from analysts.

Akamai Technologies (AKAMAnalyst Report) is one of the leading providers of cloud services for delivering, optimizing and securing online content and business applications. As of the beginning of 2014, 47% of the Global 500 companies were Akamai clients. Akamai helps the world’s leading brands overcome the challenges of online business and helps them reach global mobile users as well. Akamai tries to simplify powerful technology so customers can focus on building their business.

Unfortunately, the company has been struggling a bit recently. So much so that six analysts have dropped their earnings estimates for the current quarter, next quarter, the current year and next year. The most pronounced drop has been in next year’s numbers where our Zacks Consensus Estimate has dropped from $2.71 sixty days ago to $2.48 today.

Last quarter the company earned 50 cents per share, a penny shy of the Zacks Consensus Estimate of 51 cents. That disappointing quarter came on the heels of two bullish quarters for the company where they beat the street by 3 cents in Q42014 and 8 cents in Q32014.

The bearish sentiment by analysts has carried over to the stock’s price as well. Taking a quick look at the chart you can see that shares have struggled since mid-May after AKAM reached a fresh 52-week high above $78. Since then, shares have dipped below the 21 day moving average while the Commodity Channel Index has pushed into oversold territory under -110. Shares are currently trading at $72.50 and volume has dipped over the last month or so.

Investors looking for stock ideas within the internet services industry can look to Autohome (ATHMSnapshot Report) and Blue Calypso (BCYPSnapshot Report). Both stocks are Zacks Rank #2 (Buy).

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