After a lackadaisical first-half in 2017, Akamai Technologies, Inc. AKAM 2.64% shares picked up beginning in September. At the company’s current valuation, a KeyBanc Capital Markets analyst is bearish.

The Analyst

KeyBanc Capital Markets analyst Brandon Nispel downgraded Akamaifrom Sector Weight to Underweight with a downside price target of $51.

The Thesis

“With its current elevated valuation, deteriorating fundamental profile and less expensive alternative assets available, we see a takeout as unlikely, leading to our [Underweight] rating,” Nispel said in a Wednesday note. (See the analyst’s track record here.)

A takeout could still materialize given Elliott Management’s involvement in Akamai and the company’s own strategic review, the analyst said.

KeyBanc sees the possibility of a strategic buyer for Akamai, rather than a financial buyer, on the basis of opex and capex prospects.

“While we believe there could be a long list of potential acquirers, we also believe there are smaller, more nimble startups that are less expensive and could be a better fit than AKAM,” Nispel said.

A leveraged buyout could result in a valuation in the high $70s to low $80s, assuming a bull case scenario, with a potential acquirer likely to pay a 20-25 percent premium for Akamai, he said.

KeyBanc isn’t too convinced about the strategic value of the company’s assets, although Nispelsaid a shift in focus to enterprise security could open up its addressable market.

The Price Action

Shares of Akamai are down about 7 percent over the past year, although they have gained about 39 percent since September.