Akamai's Stock Tumbles After Weak Outlook Prompts Analyst Downgrades

By Tomi KilgoreMarketsMarketWatch Pulse

Shares of Akamai Technologies Inc. tumbled 13% in premarket trade Wednesday, after the content delivery service's disappointing revenue outlook, amid continued weakness in its media business, prompted analyst downgrades. The stock was on track to open at a 6 1/2-month low. The company reported late Tuesday first-quarter earnings and revenue that beat expectations, but said on a conference call after the results that current-quarter revenue was expected to be $597 million to $609 million, which was below the FactSet consensus of $623 million at the end of April. Analyst Greg Miller at SunTrust Robinson Humphrey downgraded Akamai to hold from buy and slashed his stock price target to $54 from $82. "Accordingly, even with security outperforming, we believe headwinds and lack of visibility prevent us from continuing to recommend the stock," Miller wrote in a note to clients. D.A. Davidson analyst Mark Kelleher cut his rating to neutral from buy, saying weak outlook contradicted his previous belief that its core media business was growing rapidly. He cut his stock price target to $57 from $76. The stock had lost 6.3% year to date through Tuesday, while the S&P 500 has gained 6.8%.

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