02:39 PM EDT, 05/02/2024 (MT Newswires) -- Fastly's (FSLY) short-term risks outweigh the long-term benefits as factors like slower growth of the biggest customers, decreasing market share and H2 uncertainty make its recovery doubtful, BofA Securities said in a note Thursday.

The company holds potential in the edge computing market, but it will not drive significant growth until 2025, according to the note.

The firm said Fastly is losing market share and facing pricing pressures in its content delivery network business due to lower renewal rates without the usual increase in web traffic and adoption of multi-vendor content delivery network providers.

"Fastly's largest customers, which account for 40% of revenues, typically do not have minimum commits embedded

in contracts, further increasing the risk of traffic being diverted to lower-cost providers," BofA added.

The firm expects more downward adjustments to the revenue growth forecast ahead because it sees the company's assumptions of no further market share loss among top customers and improvement in acquiring new customers as overly optimistic given current trends.

BofA downgraded Fastly to underperform from buy and reduced price objective to $8 from $18. The company shares were down almost 35% in recent trading.

Price: 8.42, Change: -4.51, Percent Change: -34.88