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Let's talk about the popular Akamai Technologies, Inc. (NASDAQ:AKAM). The company's shares received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$102 at one point, and dropping to the lows of US$73.69. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Akamai Technologies' current trading price of US$73.69 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Akamai Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Akamai Technologies Still Cheap?
According to our valuation model, Akamai Technologies seems to be fairly priced at around 13% below our intrinsic value, which means if you buy Akamai Technologies today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $85.04, then there’s not much of an upside to gain from mispricing. Furthermore, Akamai Technologies’s low beta implies that the stock is less volatile than the wider market.
Check out our latest analysis for Akamai Technologies
Can we expect growth from Akamai Technologies?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Akamai Technologies' earnings over the next few years are expected to increase by 51%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? AKAM’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on AKAM, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.