By Matt Phillips
Most think of Akamai as a play on surging online video traffic. But a number of notes out today point out that Akamai can also be seen as an e-commerce play. “Strong online sales are a positive for Akamai, which counts 32% of its revenue from ecommerce, and to a lesser degree for competitor Limelight,” wrote Raymond James analysts in a note Monday. (For the record Goldman analysts say they expect about 35% of fourth-quarter revenues to come from the e-commerce unit at Akamai.)
Lazard Capital Markets analysts also upgraded Akamai shares Monday, raising their rating from “hold” to “buy.” And in their call they cited the e-commerce angle:
Over this past weekend, market data suggests 15%+ growth in online spending vs. our 10%-15% seasonal forecast. We believe that Akamai’s value-added services are particularly important for e-commerce sites as the company’s edge servers allow for faster site loading and transactions. We note that Akamai’s own tracking of online retail traffic has consistently indicated heavy loads over the past week.
Akamai is a stock beloved by the fast trading crowd. The shares are up more than 100% this year alone. But the trading can be choppy. The shares stumbled earlier this month after Level 3 Communications said it was chosen as a primary content-delivery network for Netflix Inc. Oppenheimer analysts cut their ratings on Limelight and Akamai following that news, citing the prospects for a price fight between such companies. But Akamai shares have since clawed their way back to roughly flat in November.
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