Cloud Computing Stocks Shine

Brittney Barrett |

Cloud Computing Stocks ShineCloud computing has been lauded as the future of information sharing since many companies from Apple to Amazon put their hat in the ring earlier this year. Until now, it’s been a challenge to assess how these ventures would do in terms for profitability, but the most recent earnings reports of three of the major players indicate they have exceeded even the market’s high expectations.

Shares of cloud pioneers Akamai (AKAM), LogMeIn (LOGM) and Citrix (CTXS) all rose close to 20 percent during the session after their respective earnings reports indicated strong growth and an optimistic trajectory for the future.

Akamai , which operates a network that both hosts and expedites the delivery of content online, added close to 17 percent after the company reported third –quarter revenue of $282 million, up 11 percent from the same period last year. The company generated fully taxed normalized net income of $63 million or $0.34 per diluted share. During the year-earlier period Akamai took in only $29.7 million or 21 cents a share on total sales of $253.6 million. Further intensifying investor enthusiasm for the stock was the company’s projected fourth-quarter sales. Akamai said they expect earnings between $303 million to $315 million, on the higher end of analyst predictions.

A conference call reporting earning stated that results were driven by, among other factors, continued strong demand for the company’s Dynamic Site Acceleration solutions, or DSA, along with solid early traction for Akamai security portfolio. In under a year of general availability, Akamai said they already have in excess of 125 customers leveraging their security solutions in the cloud platform.

This statement helped to boost shares of other cloud companies as well like Level 3 Communications (LVLT) which added about 5 percent during the session. Level 3 is expected to release their own earnings report on November session. The company has tacked on roughly 17 percent over the last five trading days.

Another cloud computing outfit that made waves today was Citrix, shares of which added over 17 percent following the delivery of third quarter earnings.

Third-quarter profit rose 5% as the virtualization and infrastructure software company reported broad revenue growth, especially from product licenses and its online and technical services segments. Shares rose as revenue topped the company's guidance and as the company issued an upbeat forecast for the current quarter.

Citrix, which develops and markets virtualization and infrastructure solutions that enable on-demand IT to delivery, reported third-quarter earnings of $92 million, or 49 cents a share on $565 million in sales. During the same period last year profit was $88 million or 46 cents a share on revenue of $472 million in the year-ago quarter. The 5 percent increase in profit couple by a sunny fourth quarter sales forecast between $610 and $620 million or 75-76 cents per share, helped Citrix push sharply higher.

Analyst response to the earnings report was mostly positive. The company is being lauded as a pioneer within its space and general sentiment seems to be that the company has room for considerable growth. Equities research analysts responded to this and the most recent earnings with a series of upgrades.  Morgan Keegan raised their price target on shares of the company from $75.00 to $85.00 in a research note issued on Thursday while Needham & Company upgraded Citrix to a “buy” from its previous “neutral” level.

Citigroup bucked the trend by reiterating a neutral rating on shares.

Finally, LogMeIn (LOGM) confirmed the dominance of the cloud-computing sector with shares also climbing 14 percent late following a late Wednesday earnings report. LogMeIn, which delivers cloud networking software for corporations earned $1.1 million, or 4 cents a share, on revenue of $31 million. During the same period last year sales were $25.3 million.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
PLKI Popeyes Louisiana Kitchen Inc 59.74 -0.34 -0.57 57,119
LOGM LogMein Inc. 96.95 0.10 0.10 373,526
AKAM Akamai Technologies Inc. 63.87 0.36 0.57 2,284,018
CTXS Citrix Systems Inc. 85.62 0.15 0.18 1,200,270
LVLT Level 3 Communications Inc. 55.82 0.63 1.14 1,860,229

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