DA Davidson cuts Fastly stock price target on customer concentration concerns

DA Davidson, a prominent investment bank, has reduced its price target for Fastly Inc. (NASDAQ:FSLY) to $17 from an earlier $23 assessment. Despite maintaining a Neutral rating on the stock, the firm's decision reflects growing concerns over the company's customer base concentration. In its latest report, DA Davidson analyst Rudy Kessinger highlighted that Fastly's top 10 customers contributed to 39% of the company's revenue, an increase of 2 percentage points from the previous quarter.

These customers accounted for an impressive 92% of sequential revenue growth and 74% of year-over-year growth. However, revenue from all other customers slowed to just 8% year-over-year growth, a stark contrast to the 12% growth in the prior quarter and 18% year-over-year growth in the first quarter. This disparity has been identified as a significant concern by DA Davidson.

Even so, eleven analysts have recently revised their earnings estimates upward for Fastly, and the company is projected to become profitable in the current fiscal year, marking a turnaround from a $0.40 loss per share in the previous year. Amidst these developments, the tech firm also announced a high-profile deal to secure and scale agentic traffic for a leading AI company.

Moreover, Fastly reported strong third-quarter 2026 financial results, with adjusted earnings of $0.17 per share and revenue of $190.2 million, both surpassing market expectations. Despite these positive earnings, Fastly's shares experienced a decline in after-hours trading, suggesting lingering doubts about the company's future growth trajectory.

The market's response to the latest earnings report underscores the complex sentiment surrounding Fastly's performance and prospects.