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Thursday, DA Davidson adjusted its price target on Fastly Inc . (NYSE:FSLY) to $6.50, down from the previous $7.50, while maintaining a neutral stance on the company’s shares. According to InvestingPro data, Fastly currently trades at $7.45, with analysis suggesting the stock is fairly valued at current levels. The firm’s analyst cited Fastly’s first-quarter results, which surpassed consensus expectations, driven largely by gains among the company’s top 10 customers. These customers contributed approximately 70% of the quarter-over-quarter revenue growth.
Despite the positive performance in customer share gains, the analyst expressed concern over Fastly’s year-over-year security growth of only 7%, which was characterized as highly disappointing. Additionally, the long-term net revenue retention (LTM NRR) declined to 100%. InvestingPro data reveals the company maintains strong liquidity with a current ratio of 4.21, though profitability remains a challenge with negative earnings over the last twelve months. On a brighter note, the company raised its full-year 2025 guidance following a $6.5 million revenue beat in the first quarter and the inclusion of U.S. TikTok revenue through June 19th, which accounted for the majority of the $10 million revenue guidance increase.
Fastly also reported a free cash flow (FCF) of $8.2 million, marking a positive turn for the first time since the second quarter of 2023. This improvement aligns with InvestingPro’s analysis, which shows the company’s financial health score as ’FAIR’ with particularly strong metrics in liquidity management. Subscribers to InvestingPro can access 5 additional key insights about Fastly’s financial position and growth prospects. Consequently, the company’s free cash flow guidance for the full year 2025 was improved, moving from a range of negative $20 million to $10 million, to a range of negative $10 million to break-even.
The adjustment in Fastly’s price target by DA Davidson reflects these mixed financial indicators, with the firm acknowledging the company’s revenue growth and improved cash flow guidance while also recognizing the areas that fell short of expectations.
In other recent news, Fastly Inc. reported its first-quarter 2025 earnings, revealing a revenue of $144.5 million, which exceeded analysts’ expectations. The company’s earnings per share (EPS) of -$0.05 also surpassed forecasts, marking a positive surprise for investors. Fastly raised its revenue guidance for 2025 to a range of $585 million to $595 million, signaling confidence in its financial outlook. Piper Sandler analysts responded by increasing Fastly’s price target from $6.00 to $7.00, although they maintained a Neutral rating on the stock. William Blair analysts also maintained a Market Perform rating, highlighting Fastly’s 8% revenue growth and successful customer acquisition strategies. Fastly welcomed 19 new enterprise customers and reported a 64% growth in its emerging products segment, driven by demand for its edge compute products. The company’s strategic initiatives, including enhanced security offerings and AI capabilities, contributed to the strong financial performance. Fastly’s efforts to diversify revenue and mitigate potential tariff impacts were noted as positive developments for the company’s future growth.
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