Arista Networks’ Stock Shines Despite Recent Earnings Forecasts
Company Overview and Market Performance
Headquartered in Santa Clara, California, Arista Networks, Inc. (ANET) is a leader in data-driven networking solutions, catering to data centers, campuses, and routing applications. With a market capitalization of $124.5 billion, Arista offers a variety of products, including Ethernet switches, pass-through cards, transceivers, advanced operating systems, host adapter solutions, and extensive networking services.
Over the past year, Arista’s stock performance has significantly outpaced the broader market. ANET shares have surged 79.3%, compared to a 32.3% increase in the S&P 500 Index ($SPX). In the year to date (YTD), ANET shows a remarkable rise of 63.9%, overshadowing SPX’s 24.7% gain.
Additionally, when compared to the First Trust Cloud Computing ETF (SKYY), which has risen approximately 48.3% over the past year, ANET’s YTD performance remains superior, exceeding the ETF’s 34.8% returns during the same period.
Earnings Report and Analyst Ratings
On November 7, Arista Networks announced its Q3 earnings. Following the announcement, shares dropped more than 7% in the next trading session, as the company forecasted fiscal 2025 revenue growth of 15% to 17%, which was below the consensus estimate of 18%. An adjusted earnings per share (EPS) of $2.40 surpassed the anticipated $2.09, while revenue reached $1.81 billion, exceeding expectations of $1.76 billion. For the upcoming Q4, Arista projects revenue between $1.85 billion and $1.9 billion.
For the fiscal year ending in December, analysts anticipate a 26.6% growth in EPS to reach $7.75 on a diluted basis. Historically, Arista has consistently beaten earnings expectations, achieving this in each of the last four quarters.
Among 19 analysts covering ANET, the current consensus recommendation is a “Moderate Buy,” which includes 13 “Strong Buy” ratings, one “Moderate Buy,” four “Holds,” and one “Strong Sell.” This marks a slight decrease in bullishness compared to three months ago when 14 analysts rated it as a “Strong Buy.”
Future Outlook and Market Potential
On November 8, Barclays PLC (BCS) adjusted its price target for Arista Networks from $341 to $495, maintaining an Overweight rating. Although the company’s forecast projects 15%-17% growth, slightly below expectations, Barclays interprets this as a conservative estimate. They express optimism about Arista’s growing involvement in artificial intelligence and expanding market share in campus and routing sectors.
The average price target stands at $432.41, indicating a 12% upside from ANET’s current levels. The highest target of $500 presents a potential upside of 29.6%.
On the date of publication, Kritika Sarmah did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
