Cloud platforms are being adopted across multiple business sectors in 2020. Fastly (NYSE:FSLY) stock is part of this revolution as the company facilitates the move to “more powerful sites and applications” on the company’s “secure, programmable edge cloud platform.”
It’s a hyper-growth market in the making and you can capitalize on this phenomenon through a long position in FSLY stock.
Very recently, a prominent analyst set a price target on FSLY stock which I found to be surprising. The prognosis was bullish overall, yet somehow the analyst’s price target seemed rather modest.
If you truly believe in the future of the edge computing market, then there’s no reason to retain a modest outlook on FSLY stock. Sure, the shares have come up against resistance. But barriers are meant to be broken and if any stock can power its way to the next level, it’s FSLY.
A Closer Look at FSLY Stock
So, let’s talk about that resistance level now. On two separate occasions, FSLY stock bulls have attempted to push the share price above $100 and keep it there.
Unfortunately, they failed in both instances. The first attempt was in July of this year, while the second attempt occurred in early August. By late August, the bulls were in the midst of a third try at $100.
You’ll be seeing that number again as we discuss an influential analyst’s take on FSLY stock. For the time being, though, be advised that $100 will be a key resistance point until proven otherwise.
This means that the bulls will not only need to breach that level, but they’ll need to maintain the momentum. To achieve this, they’ll require a strong push on heavy trading volume, preferably for several days in a row.
Only $100?
Not long ago, Raymond James analyst Robert Majek upgraded his rating on FSLY stock from the moderately bullish “market perform” to the higher ranking “outperform.”
Raymond James analysts have clout, so this upgrade should be considered an encouraging event for FSLY stockholders. With that upgrade, Majek cited the “top-notch performance” of Fastly’s edge computing platform.
When Majek issued his assessment of FSLY stock, the shares were already working their way up towards the $100 level for the third time. Therefore, one would think that Majek’s one-year price target would be significantly higher than that.
Nonetheless, the Raymond James analyst set his price target at $100. Does he really believe that the bears will be able to keep FSLY stock in check for the next 12 months? Somehow, his price objective seems at odds with Majek’s rating upgrade.
Fastly Is Moving Fast
The $100 price target is baffling when we consider how quickly Fastly is growing from a financial perspective. After all, the company delivered astonishing 62% year-over-year revenue growth during 2020’s second quarter.
Not only that, but Fastly raised its full-year outlook for revenues in 2020. Specifically, the company projects $290 million to $300 million in total revenues during that time frame. That’s a substantial increase from the $200 million in revenues recorded in 2019.
Moreover, it was just announced that Fastly will acquire web application and application programming interface (API) protection platform provider Signal Sciences. The press release provided by Signal Services explains the synergy that the business combination will yield:
“The acquisition will expand Fastly’s robust security portfolio at a time when security at the edge has never been more critical. Signal Sciences’ strong, developer-first web application and API protection solutions will bolster Fastly’s existing security offerings to bring customers a unified edge security solution.”
To this, Fastly CEO Joshua Bixby added that Signal Sciences’ modern security tools will integrate with Fastly’s Compute@Edge platform. The result, hopefully, will be faster adoption of edge computing along with enhanced solutions for the security challenges that so many businesses are facing today.
The Bottom Line
It’s not unusual for analysts to set modest price targets on stocks. This can help to ensure that their objectives are reached within the specified time frame.
Still, a $100 price target is too modest for FSLY stock. This one’s bound to be a runner in the coming months. A year from today, don’t expect FSLY to be sitting at $100. It will, if I’m correct, be much higher than that.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
