Fastly (NYSE:FSLY) stock is soaring 24% on much higher-than-average volume after Bank of America raised its rating of FSLY stock two notches this morning. Fastly operates a content delivery network or CDN. The latter term refers to servers that enable internet content to be quickly transferred.
Bank of America’s Upgrade
The bank upgraded FSLY stock to “buy” from “underperform.” The firm also raised its price target on the company to $16 from $10.50.
According to Bank of America, Fastly’s “underlying fundamentals” are “solid,” while its recently hired CEO, Todd Nightengale, has improved the company’s prices and products. After becoming Fastly’s CEO in September, Nightengale has pushed the company to concentrate on areas in which it has competitive advantages, while also increasing its focus on internet security.
My Past Commentary on Fastly
In 2020, I was very bullish on FLSY stock, citing, among other points, its innovations that made its CDN more friendly to developers than its competitors’ offerings and the many positive reviews that it received from users.
However, amid fears about the U.S. cracking down on one of Fastly’s key customers, TikTok, the collapse of growth stocks within the tech sector, and a widely publicized outage of the company’s network in June 2021, FSLY stock tumbled.
Specifically, today the shares are changing hands for around $12.20, versus the stock’s all-time high of nearly $110 that was set in January 2021. Obviously, my bullish take proved to be incorrect, to say the least.
The Outlook of FSLY Stock
Today, however, Fastly’s trailing price-sales ratio is a reasonable 2.9. Bank of America reports that the company’s fundamentals are “solid,” and it states that the company is moving in the right direction.
Moreover, I assume that FSLY is still using the same top-notch technology that users raved about back in 2020. And the Street is becoming less bearish about rapidly growing tech names. Consequently, I would not be surprised to see FSLY stock rally in the weeks and months ahead.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.