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Akamai (AKAM) Strengthens Cloud Security Solutions Portfolio


Akamai Technologies, Inc. AKAM recently unveiled new enhancements to improve its cloud security solutions to ensure smooth digital operations.

Larger botnets and digital transformation of businesses have intensified the volume and risk posed by Distributed Denial of Service (“DDoS”) attacks. Akamai is offering additional capacity to its scrubbing centers to effectively deal with such risks.

To protect APIs and apps, and target threats associated with bots and credential abuse posed by them, the company strengthened its Akamai Bot Manager capabilities. In this regard, a new client SDK for mobile applications has also been designed.

Further, enhanced security analytics will ensure secure browsing through the support for HTTPS with TLS 1.3 that improves visibility into emerging risks and threat actors.

Product Enhancements to Provide More Security

Akamai's Enterprise Application Access aids IT and security teams to shift to ‘Zero Trust’ security architecture. Consequently, this will empower the new cloud businesses with a secure single sign-on and unified access.

The company’s mPulse real user monitoring solution is now updated with application delivery, perceived performance and page construction metrics. This will aid Akamai’s platform to deliver fast as well as secure mobile and web experience.

According to company's Retail Performance Report, a 2 second delay in loading a web page increases bounce rate by 103%. Further, if it requires more than 3 seconds loading time, 53% of mobile browsers leave the web page. Given these factors, mobile networks will require technological advancements from content delivery networks like Akamai’s.

More Security for DevOps

To empower DevOps, company has leveraged its Kona Site Defender to add support to automate application security for API protection. Akamai API Gateway offers an integrated architecture that caters to managing and securing APIs thereby mitigating risks of abuse and misuse.

In order to protect OTT service providers and other broadcasters from cyber threats, Akamai has deployed additional capabilities including Media Services Live featuring liveOrigin which will provide low latency video streaming. Further, detection service of company’s Broadcast Operations Control Center ensures real-time monitoring. Dynamic Ad Insertion capabilities will boost addressable advertising.

Cloud Security Solutions Gaining Traction

Robust adoption of Akamai’s security solutions has boosted its top-line. The company has returned 21.5% in the past year, outperforming the industry's rally of 5.9%.

Notably, company’s Enterprise Threat Protector that blocks access of employees to infected sites is expected to gain from the Nominum acquisition, completed in Nov, 2017. Cloud Security solutions segment revenues were up 32% year over year to $135 million comprising 20% of total revenues in fourth-quarter 2017.

Per an Akamai report, greater than 40% online login attempts are malicious. Per the company’s Ponemon Institute report,breaches based on malicious login attempts cost $60 million per year on an average to a digital business. These reports reinforce the fact that large enterprises are expected to increase their security budgets to efficiently address security concerns.

Recently, the company partnered with Duo Security to empower workers with “remote access VPN alternative”. Duo Security will verify the user trying to access any application which is offered by Enterprise Application Access of Akamai.

Per a recent report by Gartner, the cloud based security services market is anticipated to reach $8.9 billion by 2020 from $5.9 billion in 2017.

We believe Akamai is well poised to make the most of this growth opportunity by strengthening its solid cloud security portfolio through acquisitions and partnerships in this regard.

Zacks Rank & Stocks to Consider

Akamai carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Western Digital WDC, Mellanox MLNX and Micron MU, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The projected earnings growth rate (3-5 years) for Western Digital, Mellanox and Micron are 19%, 15% and 10%, respectively.

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