Akamai Technologies Inc., whose technology helps speed up the delivery of Web content, rose the most in more than three years after the company reported earnings that beat analysts’ estimates and announced a $1 billion share buyback plan.
The shares jumped 21 percent to $47.96 at the close in New York, their biggest single-day increase since July 2012. The shares are down 8.9 percent so far this year, compared with a 9.4 percent drop in the Standard & Poor’s 500 Index.
Akamai said fourth-quarter earnings excluding some costs were 72 cents per share, topping analysts’ average forecast of 62 cents, according to data compiled by Bloomberg. Akamai reported revenue of $579 million that also beat projections, according to a statement Tuesday.
Sameet Sinha, analyst at B. Riley & Co., and Jeff Van Rhee, an analyst at Craig-Hallum Capital Group, upgraded their recommendations on Akamai to buy. Jim Breen, an analyst at William Blair & Co., said the decline in share price during the quarter was a buying opportunity, since the company is well-positioned in the industry.
“The company buyback of 12.5% of shares and CEO Dr. Thom Leighton’s personal $10 million stock purchase plan give us conviction that management is confident rather than hopeful in the long-term outlook,” said Breen, who rates the stock as outperform, in a note to clients.
For the first quarter, Akamai sees revenue in a range from $554 million to $570 million, Chief Financial Officer Jim Benson said on a conference call with analysts. Analysts are estimating $569.9 million on average. Adjusted earnings per share are expected to range from 61 cents to 64 cents, Benson said, compared with estimates of 62 cents.