Analysts have raised their price target for Fastly from $9.42 to $10.42 per share, citing improved revenue growth projections and continued operational progress. However, they note that further gains depend on the persistence of recent momentum in security and overcoming ongoing pressures in the core business.
Analyst Commentary
Analyst perspectives on Fastly encompass both optimism stemming from recent operational advancements and caution regarding enduring challenges within its core business. Their viewpoints are notably split between anticipation for sustained progress and unease about lingering pressures impacting performance and valuation.
Bullish Takeaways
- Bullish analysts highlight Fastly's acceleration in security revenue, viewing this as a positive driver for growth and improved future revenue streams.
- Operational progress in recent quarters is seen as momentum that could support a further re-rating of the stock's valuation if the momentum continues.
- Early wins in expanding beyond the core CDN offering are contributing to the company’s ability to broaden its market opportunity and reinforce long-term growth prospects.
Bearish Takeaways
- Bearish analysts remain concerned about ongoing pricing pressure within the core CDN segment, which has been experiencing high-teens decline year over year.
- Recent gains are viewed as preliminary; analysts seek sustained execution before fully embracing a more positive outlook on the company’s valuation.
- The need for consistent performance in both security and core business lines is seen as critical for Fastly to deliver on elevated growth projections and justify further share price appreciation.
What's in the News
- Launched the Fastly Certified Services Partner Program, which enables partner organizations and their technical security professionals to receive comprehensive training and certification on implementing Fastly's advanced security solutions (Key Developments).
- The certification program allows customers to choose implementation services from either Fastly’s professional services team or certified local partners. This increases flexibility and options for security solution deployment (Key Developments).
- Issued earnings guidance for the fourth quarter, projecting total revenue of $159.0 million to $163.0 million (Key Developments).
- Provided full-year 2025 revenue guidance, expecting total revenue in the range of $610.0 million to $614.0 million (Key Developments).
Valuation Changes
- Consensus Analyst Price Target: Increased from $9.42 to $10.42 per share, reflecting a modest upward revision.
- Discount Rate: Decreased from 10.07% to 9.69%, which indicates lower perceived risk in future cash flows.
- Revenue Growth: Risen from 7.03% to 7.51%, which points toward slightly improved expectations for top-line expansion.
- Net Profit Margin: Improved from 6.41% to 6.61%, which suggests a modest gain in anticipated profitability.
- Future P/E: Increased from 47.0x to 48.6x, which implies a higher earnings multiple based on forward projections.
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