Oppenheimer Downgrades Akamai, Looking For Better Entry Point

In a report published Tuesday, Oppenheimer analysts downgraded the rating on

from Outperform to Perform. Although the analysts believe that the company's fundamentals are still intact, they would prefer to wait for a more attractive entry point for the stock. "The stock has benefited from secular cloud and security growth. The secular trends should continue, but the stock is at the high end of its three-year trading range and well above the 200 day moving average," the analysts explained. Although Akamai has a strong network and CDN capabilities, the company is likely to witness temporary pricing pressure for OTT video contracts, given that the attractive returns are prompting its larger competitors to expand their CDN capabilities. In addition, the company has increased its spend in anticipation of increased demand. With opex also having risen, the analysts expect FCF to be pressured in the short term. "Further, in 2Q and 3Q AKAM faces tough YOY comps with no major media events this summer compared to last year with the World Cup," the Oppenheimer report said. The analysts expect Akamai to report 9 percent EBITDA growth for the year, which is "half the average of the last three."