A new and glowing analyst research note couldn't keep the bears from clawing Fastly (FSLY 4.40%) stock Friday. The content delivery network operator's shares fell by 3% due to lingering pessimism days after it published its latest earnings report.
Raymond James analyst Frank Louthan was the prognosticator banging the table for Fastly on Friday. He upped his recommendation on the stock to strong buy from outperform (the equivalent of a buy rating) in reaction to its significant post-earnings sell-off on Thursday, although he cut his price target on the shares from $42 to $35.
In his view, that share price drop was "an overreaction to the conservative top line guidance management unveiled for 2022."
That guidance was embedded in Fastly's fourth-quarter earnings release, which revealed that its revenue grew 18% year over year to just under $98 million, while deepening its non-GAAP adjusted net loss to $11.7 million from its Q4 2020 of $10.5 million.
Those headline figures actually beat the average analyst estimates, but that wasn't the issue. Fastly is forecasting $400 million to $410 million for revenue in 2022. However, the consensus analyst estimate was for nearly $419 million. Worse, the company's anticipated adjusted net loss in the $0.50 per share to $0.60 per share range is deeper than the consensus estimate of $0.48 per share.
The Raymond James analyst believes Fastly will do notably better than that.
In his note, Louthan wrote: "Our conversations with management do not indicate any fundamental weakness or significant concerns that they have for 2022 -- only a recognition that the usage-based nature is less predictable, and they are taking a highly conservative stance to protect themselves from a repeat of the self-inflicted wounds of last year."