FSLY - Fastly rises as Morgan Stanley upgrades despite seeing 'incremental' cloud weakness

April, 20 2023 08:05 AM Fastly Inc. Class A

2023-04-20 08:05:15 ET

Fastly ( NYSE: FSLY ) shares rose fractionally in premarket trading on Thursday as Morgan Stanley upgraded the content delivery company despite 'incremental weakness' seen in cloud infrastructure spending.
Analyst Sanjit Singh raises his rating on Fastly ( FSLY ) shares to equal-weight from underweight, noting the company is likely to have better gross margins, even as the broader environment looks shaky.
"Cloud saw incremental pressure in Q1 from cloud optimization and slower migrations which will limit the ability of cloud infra names to materially beat or raise guidance which we think is becoming more widely known," Singh wrote in an investor note.
Concerning Fastly ( FSLY ), Singh said the though the company's long-term growth is still a question, management is executing on its key priorities, including raising gross margins, prioritizing investment to support long-term growth and finding areas to improve leverage.
"In the near term, we expect share gains in Fastly's core content delivery to continue given Fastly performance advantage and large players such as Akamai less interested in competing on price," Singh added.
Last month, Fastly ( FSLY ) signed a deal with Google to boost privacy for billions of Google Chrome users .

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