Fastly Has 'Magic Of Possibility,' Says Analyst: 'Growth Comes From Non-Top 10 Enterprises'

Fastly Inc FSLY reported mixed results for the fourth quarter.

However, the San Francisco-based company is gaining market and has “multiple upside levers,” according to Piper Sandler.

The Fastly Analyst: James Fish upgraded the rating for Fastly from Neutral to Overweight, while reducing the price target from $19 to $16.

The Fastly Thesis: A favorable competitive landscape, the stabilizing of OTT metrics, and new packaging are just some of the many drivers of sustainability in the company’s CDN business, Fish said in the upgrade note.

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The strength of new business in the back has of 2023 have creates tailwinds for 2024, he stated. “While customer concentration remains a concern, 50% of Y/Y growth is coming from non-Top 10 enterprises, nearly half of incremental internet traffic is driven by a handful of Fastly’s largest customers, & we see little risk of further 'DIY; or competitive replacements near-term,” the analyst wrote.

There seem to be several opportunities for Fastly’s Security business, Fish said. While “a more complete web-security portfolio should stabilize web-delivery share,” new products around Bot Management and API Security could drive 6% to 8% further total growth, he added.

FSLY Price Action: Shares of Fastly had risen by 7.30% to $13.44 at the time of publication on Monday.