Wednesday, February 16, 2011

Akamai Technologies, Inc. (NASDAQ:AKAM) Q1 2011 Price Target

Recent price: 42.95$
P/E Ratio: 47.57
3 Months Target Price: 52$

Company Description
According do the invetor's relations section of their website, Akamai® provides market-leading, cloud-based services for optimizing Web and mobile content and applications, online HD video, and secure e-commerce. Combining highly-distributed, energy-efficient computing with intelligent software, Akamai’s global platform is transforming the cloud into a more viable place to inform, entertain, advertise, transact and collaborate. Akamai is committed to delivering superior, sustained value to its shareholders.

Confidence Margins
Strong resistance $54.65 (+27%)
Light resistance $52.72 (+23%)
Light support $39.90 (-7%)
Strong support $36.69 (-15%)

Even if the company provided strong quarterly earnings, they proved to be very disappointing for the analysts who were on the conference call. Adding to their slump was that CISCO, a bellwether for the technology industry, came with very disappointing quarterly results for the same quarter. This temporary downturn presents investors with a great buying opportunity.

Entry strategy
For the cautious investor:
Buy the stock for 44$ or less.

For the risk-taking trader:
The May 2011 43$$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 390$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 52$, or keep it until 54$ if you are more bullish in your own analysis. It is highly recommended to keep the position on check if it goes sour.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 52$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

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