Akamai's Cloud Facing Headwinds and Narrowing Guidance

Akamai Technologies Inc. (NASDAQ: AKAM) shares dipped on Tuesday after the company announced updated guidance for the coming quarter and the full year in connection with its analyst day.

In most cases, if a company is expecting a rough quarter, it is better off to update guidance ahead of the results and get it over with rather than suffer later when the stakes could be higher.

Due to the strengthening of the dollar since the guidance was issued on April 30, revenue and earnings for the second quarter are expected to face a headwind of $3 million and $0.01, respectively. As a result, the company now anticipates its second quarter 2018 revenue range to be $658 million to $663 million and earnings per share (EPS) to be between $0.79 and $0.81.

Thomson Reuters consensus estimates call for $0.80 in EPS and $665.85 million in revenue for the quarter.

Looking ahead to the full year, Akamai now expects its 2018 revenue range to be $2.675 billion to $2,705 billion and EPS of $3.20 to $3.30. The increase to EPS guidance is due to expected improvement in the company’s operating margins. Previously the company anticipated revenue in the range of $2.69 billion to $2.72 billion and EPS in the range of $3.15 to $3.25.

Consensus estimates are $3.27 in EPS and $2.72 billion in revenue for the full year.

Shares of Akamai were last seen down about 3% at $75.20, with a consensus analyst price target of $79.32 and a 52-week trading range of $44.65 to $83.08.

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