Strength Seen in Akamai Technologies (AKAM): Can Its 10.4% Jump Turn into More Strength?

(AKAM) shares soared 10.3% in the last trading session to close at $104.61. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4.6% gain over the past four weeks.

The increasing demand for Akamai’s security solutions will likely translate into a significant growth opportunity over the long term. With the rapid adoption of cloud computing, security has become a major concern for enterprises. Hackers are using new and sophisticated techniques to take advantage of the security loopholes of the cloud. Large enterprises are expected to increase their security budgets to efficiently address security concerns and instill confidence in cloud computing. The company’s security offerings are also poised to gain from higher demand for data computing at the edge, triggered by the rapid deployment of 5G and IoT devices. 

The market for API (application programming interface) security is expected to witness substantial growth in the coming years. Akamai is actively pursuing the opportunity. With the acquisitions of Neosec and Noname Security, Akamai has accelerated the advancement of its AI-powered API security solution. By leveraging AI capabilities, the solution effectively analyzes APIs, detects vulnerabilities and minimizes risks. With the growing use of APIs, the demand for such solutions is poised to rise among enterprises.

This cloud services provider is expected to post quarterly earnings of $1.75 per share in its upcoming report, which represents a year-over-year change of +5.4%. Revenues are expected to be $1.08 billion, up 5.6% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Akamai Technologies, the consensus EPS estimate for the quarter has been revised marginally higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on AKAM going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Akamai Technologies is a member of the Zacks Internet - Services industry. One other stock in the same industry,

(SPT), finished the last trading session 5.6% lower at $6.87. SPT has returned -28.6% over the past month.

For Sprout Social, the consensus EPS estimate for the upcoming report has changed +3.4% over the past month to $0.16. This represents a change of -15.8% from what the company reported a year ago. Sprout Social currently has a Zacks Rank of #3 (Hold).