KeyBanc has begun coverage on Arista Networks (ANET, Financial), assigning the stock an Overweight rating along with a price target of $115. The financial firm anticipates a recovery in Cloud Titan revenue, particularly from M&M, by 2025, and foresees ongoing growth in both Enterprise and Provider sectors.
KeyBanc suggests these elements could lead to an improvement in guidance, noting that Arista Networks deserves a higher valuation. The report implies that the recent decline in stock price may present a favorable buying opportunity for investors.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 21 analysts, the average target price for Arista Networks Inc (ANET, Financial) is $105.09 with a high estimate of $130.00 and a low estimate of $79.00. The average target implies an upside of 9.12% from the current price of $96.31. More detailed estimate data can be found on the Arista Networks Inc (ANET) Forecast page.
Based on the consensus recommendation from 27 brokerage firms, Arista Networks Inc's (ANET, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Arista Networks Inc (ANET, Financial) in one year is $87.94, suggesting a downside of 8.69% from the current price of $96.31. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Arista Networks Inc (ANET) Summary page.
ANET Key Business Developments
Release Date: May 06, 2025
- Revenue: $2.005 billion, up 27.6% year-over-year, exceeding guidance of $1.93 billion to $1.97 billion.
- Gross Margin: 64.1%, above guidance of approximately 63%.
- Operating Expenses: $327.4 million, 16.3% of revenue.
- Net Income: $826.2 million, 41.2% of revenue.
- Earnings Per Share (EPS): $0.65, up 30% from the prior year.
- Cash Equivalents and Investments: Approximately $8.15 billion.
- Stock Repurchase: $787.1 million repurchased in Q1, with an additional $100 million in April.
- Operating Cash Flow: $641.7 million, up 24.9% year-over-year.
- Deferred Revenue: $3.1 billion, up from $2.8 billion in Q4 FY24.
- Capital Expenditures: $32 million in Q1, with $100 million expected for Santa Clara facilities in FY25.
- Q2 2025 Revenue Guidance: Approximately $2.1 billion.
- Q2 2025 Gross Margin Guidance: Approximately 63%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Arista Networks Inc (ANET, Financial) achieved its first $2 billion quarter, doubling revenue just 11 quarters after reaching its first billion-dollar quarter.
- The company's non-GAAP gross margin was 64.1%, driven by an efficient supply chain and a favorable mix of enterprise and plant customers.
- Arista Networks Inc (ANET) continues to see strong momentum in cloud and AI sectors, with a confident $750 million AI goal for 2025.
- The company secured significant customer wins across federal, high-tech, and web 3.0 infrastructure sectors, highlighting its growing market presence.
- Arista Networks Inc (ANET) is focused on cultivating its next generation of leaders, promoting proven leaders from within to reinforce its culture of excellence.
Negative Points
- Tariff uncertainties pose a significant risk, potentially impacting gross margins and requiring price adjustments.
- The company faces challenges in accurately forecasting the impact of tariffs on future quarters, leading to cautious guidance.
- Product deferred revenue has increased, reflecting volatility and uncertainty in customer acceptance and deployment schedules.
- There is ambiguity in the macroeconomic environment, with potential recession risks that could affect demand.
- Arista Networks Inc (ANET) is navigating a complex supply chain environment, with increased inventory levels due to tariff uncertainties.
