Shares of Akamai Technologies, Inc. AKAM have outperformed the broader Zacks Internet Services industry over the last three months. While the broader index returned a negative 3.2%, the stock generated a positive return of 31.1% over the same period.
The outperformance of the stock was primarily driven by the rising demand for cloud infrastructure solutions, security, mobile products and online video. Additionally, its strong foothold in the web applications domain is also a positive. Going ahead, it is set to benefit from new products like the Kona Site Defender 5.0, Bot Manager 2.0 and the Enterprise Threat Protector (ETP) service that will expand its customer base.
However, DIY initiatives by the large Internet companies remain a concern for the company’s media delivery business. Apart from foreign exchange impact on revenues, intense competition from the likes of Level 3 Communications and Limelight Networks is a major headwind.
Meanwhile, the company recently announced the acquisition of Cyberfend, a Santa Clara based bot-detection startup to boost its existing services related to bot management and mitigation. However, the financial terms of the deal were not disclosed by the company.
The Current State of Affairs
In today’s world, theft of online credentials such as username, password and credit card information and their abuse is rampant and thus a constant cause of concern for online business owners and their customers.
Notably, in Sep 2016, Yahoo YHOO faced a similar credential-stuffing attack. Also, over 85 leading U.S. companies were targeted by a group of Russian hackers a few months ago.
What this Means for Akamai?
Akamai introduced the Bot Manager early this year to help businesses cope up with automated agents and bots that visit their websites. With the introduction of Cyberfend’s technology, Akamai will be able to help both online businesses and their customers to mitigate problems caused by the data breach.
Additionally, Akamai intends to extend the capabilities of the Bot Manager to let online businesses distinguish effectively between genuine customers and attackers, which could result in lower incidences of credential thefts and abuse in the future.
As per an IDC report, worldwide spending on cybersecurity is estimated to reach a whopping $101.6 billion. Given the huge scope the segment offers, Akamai’s acquisition of Cyberfend looks aptly timed and augurs well for the company in the long run.
AKAMAI TECH Price
Zacks Rank and Key Picks
At present, Akamai carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the broader technology space include TiVo Corporation TIVO sporting a Zacks Rank #1 (Strong Buy) and Facebook, Inc. FB carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Notably, the consensus estimate for TiVo’s current year has remained stable over the last 30 days.
The consensus estimate for Facebook’s current year has been revised upward to $3.39 from an earlier $3.14 in the last 60 days.
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