S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office
S&P 500   3,852.36
DOW   32,920.46
QQQ   306.18
Europe bans Russian diesel, other oil products over Ukraine
Route to Super Bowl dangerous for Mexico's avocado haulers
Biden's State of the Union to tout policy wins on economy
How will EU ban and West's price cap on Russian diesel work?
Evacuations urged in Ohio town as train wreck smolders
It wasn’t me: Ex-UK PM Truss blames 'system' for her failure
'Knock at the Cabin' knocks off 'Avatar' at the box office

The Analysts Can’t Keep Up with Arista Networks Stock

Key Points

  • Arista Networks posted record revenues for Q3 2022 beating estimates and raising top line guidance for Q4 2022
  • Arista continues taking market share from Cisco and Juniper Networks with such cloud titan customers like Microsoft, Meta Platforms, Amazon Web Services, IBM and Google Cloud
  • Analysts upgraded ANET with price targets of $150 to $164, from $105 to $126, respectively  
  • 5 stocks we like better than Arista Networks
The Analysts Can’t Keep Up with Arista Networks Stock Santa Clara-based best-in-class computer networking company Arista Networks (NASDAQ: ANET) supplies multilayer network switches delivering software-defined networking (SDN) solutions to data centers and information technology customers. It’s switches are used for cloud and high-performance computing as well high-frequency trading in the financial services sector. Arista derives most of its revenues from the hardware infrastructure it delivers to data centers and networks consistently taking market share from legacy players like Cisco (NASDAQ: CSCO) and Juniper Networks (NASDAQ: JNPR). Arista uses the same software version, a single solution for diverse use cases, across all its network switches and routers to improve reliability and cut down on upgrade, patch, and maintenance costs. The Company introduced next-gen cloud routing platform innovations and Unified Cloud Fabric to simplify routing for enterprise, mobile, and cloud operators while driving down operational costs and complexity. Its $1 million logos have doubled in the past three years and attained a market share leader in the 100, 200, and 400-gig ports segment.  

More Agile and Scalable

Its platform is widely considered more agile and better suited to its behemoth cloud customers like Microsoft (NASDAQ: MSFT), NetSuite, Oracle (NASDAQ: ORCL), Google Cloud (NASDAQ: GOOGL), Amazon Web Services (NASDAQ: AMZN), IBM (NYSE: IBM), and Meta Platforms (NASDAQ: META). It uses automated diagnostics to spot small problems before they get big enough to cause network outages. Outside of technology, some of its more recognizable clients include Live Nation (NYSE: LYV) and Citigroup (NYSE: C). The Company is practically recession-proof as evidenced by hitting record revenues in the heart of a bear market amid high inflation and rising interest rates and strong U.S. dollar. While Arista derives most of its revenues in the U.S., it also sells abroad to the U.K., India, Canada, Australia and Germany.

The Analysts Can’t Keep Up with Arista Networks Stock

Here’s What the Chart Says

The ANET weekly chart illustrates the head-and-shoulders (H&S) reversal pattern in the first quarter of 2022 as it made its second shoulder peak at $143.57 in March and triggered the breakdown of the neckline level of $114.85 in April. Shares sold off falling to a swing low of $89.12 by June before staging a rally upon breaking through the weekly market structure low buy trigger at $100.71 by late July. This also set the stage for a rising trend channel after peaking near the $133.67 level which was the first shoulder peak price in the previous H&S pattern. Shares oscillated back down to retest the lower envelope of the rising trend channel and bounced back up through the weekly MSL trigger at $100.71 into its Q3 2022 earnings. The blowout earnings report propelled shares back up to retest the $133.67 first shoulder peak resistance again on rising volume. ANET shares will either squeeze through the shoulder resistance to retest the second shoulder peak at $143.57 and head peak at $148.57 or fall back down towards the lower range of the rising channel before attempting another breakout. Key pullback levels to monitor sit at the $114.84 neckline, $100.71 weekly MSL trigger, $96.00 support, and the $89.12 swing low.  


Still Breaking Records

On Oct. 21, 2022, Arista released its fiscal third-quarter earnings report for the quarter ending September 2022. The Company saw earnings-per-share (EPS) of $1.25, excluding non-recurring items, versus consensus analyst estimates of $1.05, beating by $0.20. Revenues rose 57.2% year-over-year (YoY) to $1.18 billion beating analyst estimates for $1.06 billion. Non-GAAP gross margins have been falling for three consecutive quarters at 61.2%, falling from 61.9% in previous quarter and 64.9% in Q3 2021. Arista Networks CEO Jayshree Ullal commented, “Arista continues to outpace our networking peers with record revenue in Q3 2022. Clearly, we are entering the next phase of Arista’s evolution in products, customer intimacy and new market expansion.”

More Good Times Ahead

Arista Networks raised its Q4 2022 revenue guidance to come in between $1.175 billion to $1.200 billion versus $1.09 billion consensus analyst estimates. Non-GAAP gross margins are expected between 60% to 62% and non-GAAP operating margin of approximately 40%.

Analysts Are Late to the Party

After its Investor Day, several analysts upgraded their ratings and price targets. Piper Sandler admits being slightly late to the party but upgraded ANET shares to Overweight from Neutral and a $164 price target from $126, as Investors Day solidly projected 2023 potential for more than 25% growth, sustained cloud customer demand and a renewed push to gain market share of enterprise customers. Analyst James Fish noted, "Core to our thesis is the flush of backlog that is causation for >25% 2023 growth, high-quality and resilient customer base (including hyperscalers) in a challenging macro-environment, enterprise share gains, launch of new solutions (including SD-WAN & network-as-a-service (NaaS)), 400G/800G cycle in which Arista maintains top share, margin raise from best-in-class team, and positive risk-reward heading into 2023.” Bank of America also raised its rating to a Buy from Underperform with a price target of $150 from $105.

 

 

Should you invest $1,000 in Arista Networks right now?

Before you consider Arista Networks, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Arista Networks wasn't on the list.

While Arista Networks currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

10 Best Cheap Stocks to Buy Now

MarketBeat just released its list of 10 cheap stocks that have been overlooked by the market and may be seriously undervalued. Click the link below to see which companies made the list.

Get This Free Report
10 Best Cheap Stocks to Buy Now Cover

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Arista Networks (ANET)
3.1133 of 5 stars
$131.96-1.1%N/A35.96Moderate Buy$167.79
Cisco Systems (CSCO)
3.1077 of 5 stars
$48.63-1.4%3.13%17.56Hold$53.95
Juniper Networks (JNPR)
2.839 of 5 stars
$30.73-2.3%2.73%21.34Hold$34.94
Microsoft (MSFT)
2.8743 of 5 stars
$258.35-2.4%1.05%28.71Moderate Buy$278.76
Oracle (ORCL)
2.6081 of 5 stars
$89.62+0.3%1.43%28.09Moderate Buy$92.54
Amazon.com (AMZN)
3.0464 of 5 stars
$103.39-8.4%N/A-385.77Moderate Buy$145.81
International Business Machines (IBM)
2.4175 of 5 stars
$136.94+0.4%4.82%77.81Hold$142.73
Meta Platforms (META)
2.7046 of 5 stars
$186.53-1.2%N/A21.74Moderate Buy$203.92
Live Nation Entertainment (LYV)
2.6279 of 5 stars
$79.80-2.1%N/A114.00Moderate Buy$105.67
Citigroup (C)
3.1578 of 5 stars
$50.95-1.5%4.00%7.28Hold$57.64
Compare These Stocks  Add These Stocks to My Watchlist 

Jea Yu

About Jea Yu

Contributing Author: Trading Strategies

With over 20 years of active participation and analysis of the US equities, options and futures markets, Mr. Yu brings fresh insights into the workings of the financial markets. He has published four books by esteemed publishers McGraw-Hill, John Wiley & Sons, Marketplace Books and Bloomberg Press. His brainchild, the Underground Trader, was voted Forbes Best of the Web for four consecutive years under the active trader category. He has been a featured speaker all over the country at various expos and seminars who enjoys a standing-room-only reception in the largest convention halls from New York to Las Vegas. He has been quoted and featured in USA Today, Wall Street Journal, Traders Magazine and the Financial Times and various trade publications like Stocks & Commodities, Active Trader and Online Investor. Mr. Yu has a B.A. in Liberal Arts and minor in Business Administration from the University of Maryland.
Contact Jea Yu via email at JeaYu21@gmail.com.

3 Stocks to Buy And Hold Forever in 2023

Thomas Hughes provides the benefits of Buy and Hold stocks and how they can add stability and growth to your portfolio in 2023.

Featured Articles and Offers

Search Headlines: