Fastly, Inc. (NYSE:FSLY) jumped about 4.5% during premarket trading Monday as the cloud company continues to capture a greater market share with its content delivery network, or CDN, business.
Investment bank Piper Sandler upgraded Fastly to Overweight from Neutral, based in part on the company gaining a larger share of the CDN market and a favorable competitive field.
“Fastly is gaining share in the core CDN market, largely with Media delivery exposure, with inputs like our CDN Tracker suggesting gains are continuing,” said Piper Sandler senior research analyst James Fish. “There are multiple confidence drivers in the sustainability of Fastly’s CDN business, including the favorable competitive landscape, OTT metrics stabilizing, and new packaging.”
Piper Sandler’s CDN Tracker shows Fastly’s share of the CDN market has increased from less than 10% to more than 15% over the past three years.
Despite the upgrade, Piper Sandler lowered its price target on Fastly to $16 from $19.
The recent drop in prices has resulted in a positive risk-reward scenario based on current valuations and stock fundamentals, Fish added. Also, new products such as Bot Management and API Security could drive growth another 6% to 8%.
Fastly’s customers include some of the largest players in the media industry, such as Walt Disney (DIS) and Warner Bros. Discovery (WBD).
Fastly has a Buy rating from both Seeking Alpha and Wall Street analysts. It has a Hold rating from Seeking Alpha’s quant system, which routinely beats the market.
