AKAM - Akamai Technologies slips as Guggenheim starts coverage with sell rating

• Akamai Technologies ( NASDAQ: AKAM ) shares fell more than 2% in premarket trading on Tuesday as investment firm Guggenheim started coverage on the content delivery network firm with a sell rating.
• Analyst Raymond McDonough started Akamai Technologies ( AKAM ) with a per-share price target of $75, implying 14% potential downside, noting that while it is a well-run company, there are several risks that investors are not accounting for.
• "First, we believe the Street is underestimating investments needed to expand Linode's footprint," McDonough wrote in a note to clients. "While we see longer-term upside to Compute revenue, near-term capital intensity is likely to be higher (potentially significantly higher) than Street estimates, and we do not expect investors will give Akamai the benefit of the doubt in building out ahead of demand."
• McDonough also noted there is "material risk" in estimates for Akamai Technologies' ( AKAM ) security business as new business growth has decelerated for more than a year and the macro environment is not getting better.
• McDonough cut his 2023 free cash flow estimates to roughly 18% below Wall Street consensus.
• Akamai Technologies ( AKAM ) is scheduled to report fourth-quarter results next month .

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