Citigroup analyst John Reilly Walsh began covering the stock with a price target of $68, and said the content delivery network market is "extremely robust, allowing ample room for robust growth by multiple competitors."
Last year, it was a $600 million market, he
wrote, and it will probably see compound growth of 35 percent to 50 percent during the next three years.He
to hold about 80 percent of that market, while increasing its revenue as much as 35 percent to 45 percent.
network footprint has been built out over the last several years and revenue growth should materially outpace future investments and operating expenses, resulting in operating leverage," he
estimated the Cambridge Center
, Mass., company
will bring in profit of $1.27 per share on sales of $625.4 million it its fiscal 2007.
Analysts polled by Thomson Financial, on average, anticipate $624.6 million in revenue with earnings of $1.29 per share.Walsh
wrote that demand for broadband Internet is growing, as is distribution of increasingly big files across the medium.He
will benefit from long-term Internet advertising growth, which increases revenue for e-commerce companies, which are one of the company's most important customer segments.Akamai
should also see gains as video and rich media advertising become more relevant, he
The company's software and e-commerce verticals are strong, he
wrote, as most antivirus companies use Akamai
and online retailers "appear to consider Akamai
something of a 'must have.'" Together, they comprise 60 percent of the company's revenue.
The analyst wrote Akamai
does face some issues, particularly competition from content delivery network companies like Limelight, Panther Express and Mirror Image.He
also wrote it's possible Google Inc. could get into the content delivery network business, though he's
not convinced it would create a new competitor for Akamai