NEW DIRECTIONAL CALL PLAYS
Akamai Technologies - AKAM - close: 71.05 change: +1.19
Stop Loss: 68.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.5 million
Entry on March -- at $---.--
Listed on March 04, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below
Why We Like It:
February was the U.S. market's best monthly performance in years. One stock outpacing the broader market was AKAM. Shares rallied +18% in February and that's after the minor pullback from its late February highs.
The company is part of the technology sector. They provide cloud services for delivering content across the Internet. Customers include 47% of the Global 500 companies.
AKAM describes itself as "the global leader in Content Delivery Network (CDN) services, Akamai makes the Internet fast, reliable and secure for its customers. The company's advanced web performance, mobile performance, cloud security and media delivery solutions are revolutionizing how businesses optimize consumer, enterprise and entertainment experiences for any device, anywhere."
Last year was a strong one for earnings and revenue growth. AKAM beat Wall Street estimates on both the top and bottom line the past four quarters in a row. They raised guidance twice. AKAM's average revenue growth last year was +24.5%.
Their most recent report was on February 10th where AKAM delivered a profit and revenue number above expectations. Several analyst firms raised their price target on AKAM following its Q4 results.
Management hosted an investor day in late February. They expect sales growth to be in the high teens for 2015. They forecasting sales to hit $5 billion by 2020 compared to about $2 billion in 2014. AKAM reported that their cyber security business is surging with +191% growth last year.
This week AKAM disclosed in their 10-K filing that they were conducting an internal probe into their sales practices in a foreign country. They didn't say which country. This is a potential risk if the U.S. government decides to do their own investigation but the stock didn't really react that much to the news.
It is worth noting that there has been some speculation that AKAM is a buyout target. One analyst suggested that Amazon.com (AMZN) could be a suitor.
After big gains in February shares of AKAM have been consolidating sideways in the $69-72 zone. The point and figure chart is bullish and forecasting a long-term target at $100. We want to buy a breakout. I'm suggesting a trigger at $72.25.
Trigger @ $72.25
- Suggested Positions -
Buy the Apr $75 CALL (AKAM150417C75) current ask $0.87
Option Format: symbol-year-month-day-call-strike