Raymond James expects Fastly to beat Q1 revenue estimates, reiterates Strong Buy

Raymond James believes Fastly (FSLY) to report better-than-expected Q1 revenues as its proprietary tracking tool continues to imply favorable traffic growth, with March traffic well ahead of February levels and April tracking well relative to March, to date.

According to the firm, Fastly has the potential to earn as much as $105.5 million in CDN-related revenue, which would result in a total revenue of approximately $120.3M, taking into account the estimated Signal Sciences contribution of $14.8M.

The firm believes investors are primarily interested in the new management’s guidance this year, specifically regarding the path to consistently profitable growth. “We believe management is focused on taking costs out of the business and the path to positive EBITDA is achievable, but the tactics to get there have not been laid out to the Street,” added the firm.

Despite the implied upside to its current Q1 total revenue estimate of $116.7M, the firm noted that pricing could have once again declined at a greater-than-anticipated rate during the quarter, which would negatively impact financial results and may lead to overestimating the company’s actual performance.

As such, the firm maintained its current estimates unchanged for conservatism, but noted that it continues to believe that Fastly is well-positioned to once again beat its revenue estimates, and reiterated its Strong Buy rating.

The company will report its Q1/23 earnings results on May 3. Wall Street analysts expect EPS of ($0.10) and revenue of $116.13M.

By Davit Kirakosyan