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Akamai Technologies stock is trading higher Thursday after Cowen analyst Colby Synesael raised his rating on the content-delivery network company to Outperform from Market Perform, while upping his target price to $150 from $107.

Synesael is basically making the observation (which I made in an April Tech Trader column) that Akamai shares (ticker: AKAM) have not participated in the huge rally in internet infrastructure plays amid the Covid-19 pandemic. The analyst says there is now a meaningful disconnect between Akamai and other security and CDN stocks, despite its larger scale, higher profitability and still solid growth. He sees Akamai as an attractive way to play long-term trends like cloud security and edge computing.

Synesael points out that the stock looks cheap relative to both security plays like Palo Alto Networks (PANW) and Fortinet (FTNT) and to other content-delivery networks, such as Cloudflare (NET), Fastly (FSLY), and Limelight Networks (LLNW). He argues that Covid-19 has served as a catalyst to Akamais security and CDN businesses.

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We believe Covid-19 has resulted in increased demand for both its enterprise and internet security product offerings given the increase in the number of attacks across organizations and the internet, Synesael writes. We believe Akamais security business is an underappreciated component of its long-term growth opportunity and that as it becomes a larger portion of total revenue more investors are likely to start valuing it on its [sum of the parts] which we believe will result in a significant re-rating of the stock.

The analyst notes that there have been investor concerns about the company losing market share to peers like Fastly, but asserts that the growth of competitors is more a function of an expanding opportunity for CDN providers rather than share stealing from Akamai.

Akamai shares were up 7%, at $113.78, in recent trading, while the S&P 500 was up 0.9%. The stock is up about 32% year to date, which is impressive growthexcept when compared with Cloudflare, which has more than doubled, and Fastly, which has more than quadrupled.

Write to Eric J. Savitz at eric.savitz@barrons.com

Original post:
Akamai Is an Overlooked Web Infrastructure Play. Its a Buy, Analyst Says. - Barron's