Please ensure Javascript is enabled for purposes of website accessibility

Why Fastly Stock Jumped 7.3% Thursday Morning

By Anders Bylund - Jan 21, 2021 at 10:14AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A strongly bullish analyst note drove the tech stock higher.

What happened

Shares of Fastly (FSLY 4.35%) jumped by as much as 7.3% on Thursday morning, goosed by a bullish analyst report.

So what

Oppenheimer analyst Tim Horan upgraded Fastly from perform to outperform early Thursday, indicating that he expects the content delivery network operator to beat the market over the next year or so. Horan set his target price for the stock to $125 per share, 28% above Fastly's closing price on Wednesday.

A blue Ethernet cable twisted into a cloud shape.

Image source: Getty Images.

Now what

Horan said that his channel checks suggested record-level network traffic and a successful launch of Fastly's serverless edge computing service, compute@edge. He also argued that its stock deserves to trade at the same valuation levels as its peer Cloudflare (NET 7.55%), which commands price-to-sales and price-to-book ratios more than 50% above Fastly's.

I found myself nodding along with Horan's analysis, which assumes that consumers around the world have gotten used to more responsive e-commerce and streaming media services during the pandemic. Fastly's unique combination of high-quality edge computing and content delivery services should remain in high demand for years to come.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fastly, Inc. Stock Quote
Fastly, Inc.
FSLY
$13.20 (4.35%) $0.55
Cloudflare, Inc. Stock Quote
Cloudflare, Inc.
NET
$51.84 (7.55%) $3.64

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.