What happened

Shares of Fastly (NYSE:FSLY) jumped out of the gate Friday, climbing as much as 8.7% before the broader market decline dragged it back down. As of 2:36 p.m. ET, the stock was down about 1.4%.

The catalyst that initially sent the edge platform provider higher was an upgrade courtesy of a Wall Street analyst.

So what

Raymond James analyst Frank Louthan upgraded Fastly stock to outperform (buy) from market perform (hold) and assigned a price target of $42. His new estimate would represent potential upside for investors of more than 15% over the coming year, compared with the stock's closing price on Thursday. 

Three IT technicians looking at a computer monitor in a server room.

Image source: Getty Images.

Louthan cited "another sequential uptick in traffic" detected by the firm's proprietary tracking tool, suggesting that "Fastly should beat the high end of the revenue guide." 

To put that in context, Fastly management is guiding for revenue in a range of $90 million to $93 million in the fourth quarter, which would represent growth of 12.5% at the high end of the range. 

Analysts' consensus estimates are calling for revenue of $92.4 million, with the most bullish outlook coming in at $96.7 million. 

Louthan went on to note that Fastly stock was still hovering near its 52-week low, saying that this, combined with the potential for strong revenue growth, is a "recipe for near-term share price appreciation." 

Now what

Fastly has lost more than two-thirds of its value since February.

The internet suffered a widespread outage this past summer, taking down a number of well-known and high-visibility websites. The problem was ultimately traced to Fastly's content delivery network, which helps speed data around the internet.

The company discovered a software bug caused by "a valid customer configuration change," which sent websites falling like dominos. Fastly detected the issue that caused the problem within one minute and had 95% of its network operating normally in under an hour. Unfortunately, the damage to its reputation is taking longer to fix.

If Fastly is able to deliver revenue growth above expectations, that could go a long way toward reassuring investors that the overall growth story is intact, particularly after its very public fumble.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.