Fastly CEO’s Strategic Changes Yielding Green Shoots: Analysts See Challenges Ahead Despite Growth Drivers – Fastly (NYSE:FSLY)

Analysts re-rated Fastly Inc FSLY after its Analyst Day in New York.

Credit Suisse analyst Rich Hilliker maintains Fastly with a Neutral, raising the price target from $14 to $16.

The analyst believes CEO Nightingale and his leadership team have sowed seeds for meaningful change in both the near and long term; he is eager to see these efforts and investments yield green shoots but believe continued intensity, discipline, and time are paramount.

The analyst flagged the company forming three functional groups internally, establishing a shared platform services model, and revamping its product pricing and packaging to empower.

RBC Capital analyst Rishi Jaluria maintains Fastly with an Underperform and raises the price target from $9 to $11.

The management provided 2026 targets implying accelerating revenue growth and a significant margin turnaround at the event. While outlined growth drivers seem encouraging, Jaluria remains cautious given that Fastly remains #3 in a low-growth market with persistent pricing pressure and the potential for ongoing initiatives to take time to drive substantial change. 

The margin targets seem more reasonable given newfound operational discipline and evident low-hanging fruit for cost reduction. However, maintaining ~600 bps of annual margin improvement might be challenging while balancing growth acceleration aspirations.

Oppenheimer analyst Timothy Horan has a Perform rating on the stock.

The new simplified pricing package positively enables more accessible cross and up-selling, as customers crave predictability. 

Seeing a solid interest in edge computing, the architecture for supporting AI is unclear yet. However, Horan remains on the sidelines as competition is intense and macro pressure mounts.

The company emphasized its unified edge platform to drive an optimal user experience and product efficiency. Notably, management issued positive and aggressive 2026 financial targets.

Raymond James analyst Frank Louthan reiterated a Strong Buy rating and a price target of $25.00 target on the stock. The analyst appreciated the ongoing execution and improved color on the FY guide around EBITDA.

FSLY laid out long-term goals through 2026, including margin improvement and FCF breakeven in 2024, improving to a 6% FCF yield in 2026. His tracking tool implies that traffic is trending in line with where it exited in May, so he raised revenue to the high end of FY23 guidance and 2024E revenue to indicate a 14.5% growth rate. 

KeyBanc analyst Thomas Blakey reiterated a Sector Weight rating on Fastly.

The analyst found the presentation informative in many respects, with highlights including an overview of Fastly’s modern, software-defined solution set, a product overview including a closer look at the company’s simplified product bundling/packaging strategy driven by the new CEO, a differentiated approach to product focus and GTM alongside hyperscalers, in his view, and early success with partners and the channel, and a financial review that included a longer-term model that was ahead of the Street’s current out year expectations for revenue and FCF, but overall relatively in line with his modeling for 2023 and 2024 on the topline and continued FCF margin expansion.

Price Action: FSLY shares traded lower by 2.55% at $15.68 on the last check Friday.

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