Arista Stock: One of 2017’s Strongest Performers

Posted On September 27, 2017 3:21 pm

A Data Center

Arista Networks Inc (NYSE:ANET) has been on a tear in 2017. Arista stock has gained a whopping 88% year-to-date.  The California-based Cloud networking solutions company, whose shares started trading in 2014, has excellent product offerings which make it unique and valuable even in the presence of giants like Cisco and HP. The company is famous for its high-performance ultra-high-speed Ethernet switches, which are used in data centers.

Arista announced positive second quarter results last month. Revenue in the quarter came in at $405 million, which shows a growth of 51% on year over year basis.  Wall Street was expecting the company report a revenue of $360 million. Adjusted earnings in the period came in at $1.34 per share, better than the consensus estimate of $0.95 per share.

Several analysts are bullish about Arista Networks. Last month, BMO Capital increased its price target to $190 from $167. The firm has an “Outperform” rating for Arista stock. Nomura/Instinet also upped its price target for the company to $173 from $135.  The firm said in its report that Arista’s higher sales are sustainable because of a strong product line. Earlier this month, investment firm Morgan Stanley upgraded Arista to “Overweight”.

Morgan Stanley analyst James Faucette also increased his price target for the company to $210 from $125. Faucette said in his report that the new price target, which is 40 times 2018 EPS, is based on the company’s swift growth and better than expected margins. The analyst is also bullish on Arista’s latest partnership with HP which will allow it to enter the lucrative campus networking market. Faucette hopes that Arista will get 19% share of the data center market by the end of 2020. The market worth of data centers is expected to cross $32 billion by 2020.

On Tuesday, private banking company Berenberg started covering Arista Networks at “Buy”.

Arista’s fundamentals are strong and the company could increase its exposure in the industry through acquisitions. Arista has about $823.48 million of cash on books.

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