Fastly Likely Gaining Share From Radware, Akamai, Cloudflare Under New Leadership, Analysts Say Post Q4 Beat

RBC Capital analyst Rishi Jaluria maintained Fastly Inc FSLY with an Underperform and raised the price target from $6 to $9.
Fastly delivered solid Q4 results but a mixed 2023 outlook, in Jaluria's view.
The revenue growth was solid, margins continued to improve, and the analyst liked the business trajectory under new CEO Todd Nightingale's leadership.
However, the guidance does not appear de-risked, cash burn remains a concern, the turnaround is still unproven, and his cautions on competition remain unchanged.
Credit Suisse analyst Rich Hilliker maintained a Neutral and raised the price target from $9.50 to $11.50.
Fastly's Q4 revenue was in line, excluding one-time events, and profitability was better than expected.
Nightingale appears to be righting the ship, with early signs of enterprise momentum, improvements to operational rigor, and diligent cost management.
Pricing and packaging changes are likely to launch in Q2 and could offer a meaningful opportunity to reduce adoption friction, increase velocity, and create greater visibility.
Raymond James analyst Frank G. Louthan, IV reiterated Strong Buy with a $25 price target.
Louthan's proprietary tracking tool correctly predicted Fastly's quarterly revenue would beat the guidance and believed the ongoing execution combined with elevated full-year guidance would be well-received by investors.
While the analyst views the revenue multiples as high, he believes the steady traffic increases will continue to garner the Street's attention, especially with recent execution and the appointment of a new CEO.
His re-rating assumed that the new leadership and better growth would bring profitability sooner.
Oppenheimer analyst Timothy Horan had a Perform rating.
FSLY executing its goals to simplify service packages, expand security offerings, invest in Compute@Edge, align GTM, and implement cost controls should enable it to make the Internet a better place. They likely have unique edge delivery capabilities when demand should increase.
The company's new packaging and ability to upsell existing customers with security and edge computing is a significant driver of improved results.
The new CEO has executed very well in the last six months, and FCF margins seem to have bottomed.
The company is likely gaining some share from peers Radware Ltd RDWR, Akamai Technologies, Inc AKAM, and potentially Cloudflare, Inc NET.
Price Action: FSLY shares traded higher by 21.67% at $16.88 on the last check Thursday.

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