Fastly Rises 11% in a Month: Should Investors Buy the FSLY Stock?
Fastly FSLY shares have returned 10.5% over the past month, outperforming the broader Zacks Computer & Technology Sectorโs decline of 2.6% and the Zacks Internet - Software industryโs return of 0.8%.
FSLYโs positive share price movement has been driven by revenue growth, which increased 8% year over year to $132.4 million in the second quarter of 2024, exceeding its guidance midpoint ($130 million to $134 million). This was driven by 13% growth in Security revenues and 6% growth in Network services revenues.
The year-over-year top-line growth highlights the success of its enhanced go-to-market strategy, improved customer acquisition and expanding sales through platform solutions.
Customer acquisition efforts saw solid progress in the second quarter of 2024, with the enterprise customer count rising to 601, a sequential increase of 4%. On a year-over-year basis, FSLY grew its enterprise customer count by 50. At the end of the second of 2024, the total customer base reached 3,295, a net increase of 5 compared to the previous quarter.
Fastlyโs investment in edge cloud innovations and AI-driven solutions like the AI Accelerator are anticipated to drive future prospects. So, should investors jump into the FSLY stock based on these drivers?
Fastly, Inc. Price and Consensus
Fastly, Inc. price-consensus-chart | Fastly, Inc. Quote
Letโs dig deeper to find out.
Expanding Edge Computing Footprint Aids FSLYโs Prospects
Fastly is focusing on edge computing, which is becoming a key part of its platform, driving momentum with next-generation applications.
The Fastly platform, a software-driven edge network, delivers top-tier services, such as network delivery, security, computing and observability. The focus remains on investing in advanced technology innovations that strengthen the platform and enhance its capabilities for the future of web application development.
Fastly introduced the beta version of Fastly AI Accelerator, an AI proxy designed to boost performance and reduce costs for application developers by utilizing large language models.
Fastly's AI Accelerator harnesses the power of edge computing to provide exceptional global performance. Developers can integrate this technology with just a single line of code, enabling quick adoption and a streamlined, cost-effective development experience.
Security enhancements are an area the company is digging into. Fastly introduced new offerings, including an enhanced Managed Security Service with Bot Management and a 30-minute service level agreement for notifying customers of security incidents.
For 2024, the Zacks Consensus Estimate for revenues is pegged at $535.98 million, indicating year-over-year growth of 5.93%. The consensus mark for earnings loss is 14 cents per share, unchanged over the past 30 days.
Zacks Rank & Valuation
FSLY currently has a Zacks Rank #2 (Buy).
Although its Value Score of D suggests a stretched valuation at this moment, a strong portfolio and an expanding clientele justify this premium valuation.
Better Ranked Picks
Fortinet FTNT, PayPal PYPL and Aspen Technology AZPN are some better-ranked stocks in the same industry. Each stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of todayโs Zacks #1 Rank stocks here.
The long-term earnings growth rate for Fortinet, PayPal and Aspen Technology is currently pegged at 16.25%, 15.90 and 13.12%, respectively.
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