Fastly Stock Jumps on a Double-Upgrade. Analyst Says Shares Can Soar 62%.

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A BofA Securities analyst turned bullish on Fastly, upgrading shares to Buy on optimism about the company’s recently appointed CEO. The cloud computing company’s stock surged as a result.

Tal Liani, BofA Securities analyst, boosted his rating on Fastly stock (ticker:

FSLY

) from Underperform to Buy on Monday and raised his price target to $16 from $10.50, implying a 62% gain from Friday’s close of $9.87. Shares were up more than 26% to $12.46 after markets opened on Monday.

The small-capitalization stock had a rough 2022, falling 77% on worse-than-expected earnings, a conservative financial forecast, and a CEO departure. Other companies that provide cloud services such as

Microsoft

(MSFT) and

Amazon.com

(AMZN), tumbled 38% and 50%, respectively. 

Liani expects the bumpy ride to continue in the short term. But the analyst sees a more positive future thanks to the recent appointment of Todd Nightingale as CEO. “Fastly has solid underlying foundations, which the new management team is aiming to expose,” Liani says.

Nightingale, who was appointed to the role in mid-2022, was previously the executive vice president and general manager of Cisco Systems’ (CSCO) Enterprise Networking and Cloud division. Liani says Nightingale has laid out a strategy that should drive revenue and expand margins and it includes changing Fastly’s pricing model, focusing on security products, and conducting other operational changes. Liani says these moves should help Fastly reach profitability by 2024.

The company has a market capitalization of roughly $1.5 billion.  

Fastly reports fourth-quarter and full-year earnings on Wednesday after the market closes. Analysts surveyed by FactSet expect the company to report a 65 cent loss in earnings per share for 2022. They see revenue at $427.7 million, up 21% from 2021.

Write to Karishma Vanjani at [email protected]