Analyst Urges Caution on Fastly with Underperform Rating: Says Slow and Steady Wins the Race

Credit Suisse analyst Rich Hilliker maintains Fastly Inc FSLY with a Neutral, raising the price target from $11.5 to $14.

Results were marginally better than estimates, with guidance for revenue in line and operating income slightly shy of expectations. 

The analyst flagged FSLY's new partner program, which he believes is set to complement its underlying platform efforts. 

It suggests early signs of scalable progress could be ahead—especially when coupled with streamlined pricing, packaging, and operational rigor. The analyst awaits further partner and cross-sell traction in FY2023+.

Fastly must improve its operational rigor, standardize its go-to-market and product packaging, and reinvigorate deal velocity to enhance its path toward enduring value creation. 

RBC Capital analyst Rishi Jaluria reiterates Fastly with an Underperform and maintains a $9 price target.

Fastly reported inline results while maintaining 2023 guidance. Revenue growth decelerated to 15% YoY with a smaller-than-usual upside to consensus. Guidance continues to imply slightly accelerating growth, which he struggled to underwrite into a potentially broader economic slowdown. 

While he appreciated and agreed with ongoing turnaround actions under new management, it's hard to dismiss that these efforts are still very early and expectations are likely too high near term (stock up 65% YTD).

Raymond James analyst Frank Louthan maintained a Buy rating on Fastly and set a price target of $25.00.

The analyst's proprietary tracking tool again correctly predicted that Fastly's quarterly revenue would beat the guidance. He believes the ongoing execution and reaffirmed full-year guide will be well-received by investors. 

Management landed new contracts, including Alphabet Inc GOOG GOOGL Google, and a reported Walt Disney Co DIS Disney+ traffic bump, and changed some of its go-to-market strategies. 

They have a new channel program based on similar partner programs the CEO used at Cisco Systems, Inc CSCO, and as always, when management has seen the game at a higher level, this should begin to contribute quickly. 

Sales accounts were reshuffled in the quarter as management removed some dead weight and improved the cost structure. 

While this tends to slow growth, the large contract wins and a re-focus on ensuring pricing declines are offset with traffic increases appear to keep the trajectory positive. 

Price Action: FSLY shares traded lower by 11% at $12.04 on the last check Thursday.