Analysts Warm to Akamai After Rebound

Shares of Akamai (AKAM) have rebounded this week after the company announced a new service to help enterprises deliver business applications. Akamai closed Wednesday at $37.13 a share, a gain of 23.7 percent from its close of $30.01 last Thursday. The improvement has prompted support from some securities analysts, who have been concerned that Akamai might be hurt by competition in the content delivery network (CDN) market from rivals including Limelight Networks (LLNW) and Level 3 (LVLT).

On Wednesday American Technology Research analyst Rob Sanderson started coverage of Akamai with a buy rating, advising clients to buy the stock ahead of earnings on October 24. "We think fundamentals are not as bad as feared and expect guidance will be in-line or better than current consensus," a combination he thinks can provide a catalyst for the stock, according to Barron's Tech Trader Daily.

Akamai announced Monday that it has expanded its services into the enterprise data center, offering an appliance that serves as an on-ramp to Akamai's content distribution network. The new service allows enterprises to use Akamai's network to boost the performance of in-house applications without having to house equipment in Akamai's colo space. Akamai's IP Application Accelerator figures to help the company expand its business beyond its roots in the CDN market and media customers.