On Tuesday, Piper Sandler confirmed a positive outlook on Fastly Inc . (NYSE: NYSE:FSLY), maintaining an Overweight rating with a $16.00 stock price target. The firm's analysis indicates that Fastly, along with Akamai (NASDAQ:AKAM), benefits from consistent trends in Streaming/OTT, Gaming, and Ecommerce.
Gaming time has returned to the heightened levels observed during the COVID-19 pandemic, although year-over-year downloads, which significantly drive content delivery network (CDN) traffic, have seen a decrease.
The analyst noted stability in Streaming and Ecommerce when compared to previous surveys. The ongoing shift away from traditional cable TV, known as cord-cutting, is highlighted as a long-term positive influence for the industry. Moreover, streaming services that utilize third-party CDNs like Akamai and Fastly are reportedly increasing their usage share.
Fastly's stock rating comes at a time when the CDN market is closely watching consumer behavior in key areas such as media consumption and online shopping. The company's position in the market is linked to these macro trends, which appear to be providing a steady demand for CDN services.
The CDN industry, which includes companies like Fastly, plays a crucial role in the efficient delivery of online content. As such, the performance and growth of this sector are often seen as indicators of broader digital consumption patterns.
Fastly, which is traded on the New York Stock Exchange, provides cloud computing services to help businesses manage their internet traffic and secure their online presence. The company's stock performance is often subject to analysis by industry experts and investment firms, with ratings and price targets reflecting expectations of future performance.
InvestingPro Insights
Piper Sandler's optimistic view on Fastly Inc. (NYSE: FSLY) aligns with some key financial metrics. With a market capitalization of $1.81 billion, Fastly's valuation reflects its standing in the competitive CDN market.
The company's revenue growth is notable, with a 16.93% increase over the last twelve months as of Q4 2023, and a quarterly revenue growth of 15.47% in Q4 2023, underscoring the ongoing demand for CDN services in sectors like Streaming/OTT, Gaming, and Ecommerce.
Still, the InvestingPro Tips highlight that Fastly is not expected to be profitable this year, and it has not been profitable over the last twelve months. This is reflected in the negative P/E ratio of -13.03 and an adjusted P/E ratio of -10.5 for the same period.
Despite these challenges, Fastly's liquid assets surpass its short-term obligations, suggesting financial resilience. The company operates with a moderate level of debt, which may provide some flexibility as it navigates the competitive landscape.
Investors should also note that Fastly does not pay dividends, which could be a consideration for those seeking income from their investments. For more in-depth analysis and additional InvestingPro Tips, including high shareholder yield and the implications of Fastly's debt levels, visit https://www.investing.com/pro/FSLY.
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