BofA Assigns Underperform Rating to Fastly Despite Strong YTD Performance
Bank of America (BofA) has downgraded Fastly (FSLY), assigning it an 'Underperform' rating with a $20 price target, the lowest in its coverage group. This decision contrasts sharply with BofA's positive outlook on Akamai Technologies (AKAM) and Cloudflare (NET). The analysts argue that despite Fastly’s 98% year-to-date stock gain, it has not yet diversified away from its core content delivery business, which still accounts for about 73% of first-quarter revenue. BofA believes the company's growth remains too reliant on a traffic-sensitive segment rather than emerging areas like security and compute. In contrast, Akamai received a 'Buy' rating with a $175 price target due to its recent $1.8 billion cloud infrastructure contract with Anthropic and an acquisition that expands its AI security capabilities. Cloudflare also earned a 'Buy' rating at $330, supported by strong first-quarter revenue growth of 34% year-over-year. Fastly is set to report second-quarter earnings on August 5, adding urgency to BofA’s bearish stance as the stock trades with expectations for transformation it has not yet fully delivered.
Tickers: $AKAM $BAC $FSLY $NET
Topics: cloud infrastructure cybersecurity earnings reports stock analysis