DA Davidson has trimmed its one-year price target on Fastly Inc. (NASDAQ: FSLY) to $9.00 from $11.50 but left its rating on the shares at Neutral. The firm said the reduction primarily stems from updated operating profit assumptions for calendar year 2026 that more closely match management's stated framework for incremental operating margins of roughly 25-40%.
Fastly shares were trading at $8.49, positioned inside a 52-week trading range of $4.65 to $12.59. Market data noted by analysts suggests the stock may be undervalued within that range.
DA Davidson flagged a generally constructive setup heading into Fastly's upcoming quarterly report, scheduled for February 11 - just two days from the date of the note. The analyst house still expects a solid fourth-quarter performance, with potential upside to both revenue and earnings. In addition to Q4 prospects, DA Davidson anticipates the company will issue initial calendar year 2026 guidance that modestly exceeds current consensus estimates.
Street analysts polled prior to the report have projected Fastly will return to profitability for the fiscal year, with an EPS forecast of $0.06 for the period. Those expectations sit alongside DA Davidson's revised margin profile for 2026, which is the central reason for the lower price target.
Beyond the earnings cadence, DA Davidson also pointed to recent management commentary gathered at investor meetings and in direct conversations that highlighted traffic growth and favorable pricing trends. Those operational cues were listed as positive indicators for the company's near-term revenue trajectory.
Fastly has not been profitable over the last twelve months, but it has continued to grow revenue, reporting year-over-year expansion of 9.45% to $592 million. The company’s revenue growth and management remarks on pricing and traffic are important context for analysts as they model margin recovery into 2026.
Market performance has been mixed. DA Davidson observed that the stock has fallen 35% from its November 2025 peak, a decline that coincides with a year-to-date price decrease of 15.8% reported by market data services. The firm characterized the current positioning as a favorable setup into the upcoming results given the stock's recent price action.
There have been several corporate and capital markets developments at Fastly in recent weeks. The company priced an offering of $160 million in 0% convertible senior notes due 2030, an increase from an initial target of $125 million. The notes are scheduled to mature on December 15, 2030, and the issuance is expected to settle by December 9, 2025. Fastly granted initial purchasers an option to acquire an additional $20 million in notes.
On the brokerage front, KeyBanc revised its stance on Fastly to Overweight from Sector Weight after holding discussions with the company's new chief financial officer and head of investor relations. That upgrade followed the capital markets activity and management outreach documented by the firm.
Fastly also plans to change its exchange listing from the New York Stock Exchange to the Nasdaq Global Select Market no later than December 9, 2025. The company will retain its existing ticker symbol, FSLY, following the transfer.
Implications
DA Davidson's adjustment of its price target is a direct consequence of recalibrated operating profit assumptions for 2026, aligning analyst forecasts with management's public margin framework. The company’s recent financing and planned listing move, together with management commentary on traffic and pricing, form the backdrop for investor expectations ahead of earnings.
- Earnings catalyst - Q4 report due February 11 could prove pivotal for near-term stock direction.
- Margin recovery - 2026 operating profit assumptions are central to valuation revisions.
- Capital strategy - Convertible note issuance and listing transfer are active elements of Fastly's financing and corporate strategy.