Fastly (FSLY) Stock Forecast & Price Target

Fastly is a cloud computing company that is expected to continue seeing growth in both its network services and security revenues. This growth will be driven by strong cross-selling and penetration in its security solutions and the continued adoption of compute solutions. The company also plans to expand its services to include an Inference-as-a-Service offering, which could further contribute to its growth. Additionally, Fastly has shown a strong focus on profitability, with its EBIT margin expanding and full-year guidance being raised. However, there is a risk that the company may face challenges in gaining traction in its security segment or that its CDN revenues may decline unexpectedly. Our updated estimates result in a Neutral rating and a price target of $27 based on a multiple of 6x CY27E Revenue of $783M.

Fastly is facing challenges in its core CDN and security business, as evidenced by lower-than-expected revenue and higher expenses. Despite potential growth in the security space, the company may struggle to maintain its strong growth rate in the long term, and its high valuation compared to industry peers raises concerns. We recommend a wait-and-see approach as the company works to diversify its offerings and improve its financials.