Cautious Outlook on Fastly: Concerns Over Sustainability of Positive Trends Amidst Macroeconomic Uncertainties

Analyst Madeline Brooks from Bank of America Securities maintained a Sell rating on Fastly (FSLY – Research Report) and keeping the price target at $5.00.

Madeline Brooks’s rating is based on several factors that raise concerns about Fastly’s ability to sustain its recent positive trends. Despite a strong start to the year with revenue growth exceeding expectations, there is skepticism about the sustainability of these improvements. The company’s increased revenue guidance appears optimistic, as it relies on continued positive trends amidst macroeconomic uncertainties and volatile demand, particularly from its top customers.
Furthermore, while there are positive signs such as increased traffic and stabilized pricing, key metrics have yet to show consistent positive inflection. The security segment, expected to drive growth, has shown a sequential decline, and the net revenue retention rate has decreased, indicating potential challenges in maintaining growth momentum. These factors contribute to the cautious outlook and the decision to maintain a Sell rating on Fastly’s stock.

According to TipRanks, Brooks is an analyst with an average return of -25.2% and a 17.14% success rate. Brooks covers the Technology sector, focusing on stocks such as CyberArk Software, Fastly, and Akamai.