Bank of America Securities analyst Tal Liani reiterated a Buy rating on Arista Networks today and set a price target of $155.00.
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Tal Liani has given his Buy rating due to a combination of factors that highlight Arista Networks’ strong growth prospects. The company’s second-quarter results exceeded market expectations, and its guidance for the third and fourth quarters suggests continued robust performance. Arista is benefiting from increased capital expenditures by major cloud service providers, which is driving growth in both its cloud and non-cloud segments. This positive outlook has led to an increase in the price objective from $130 to $155, reflecting a higher valuation multiple based on expected earnings.
Despite the strong growth, there are some risks associated with the company’s high valuation and potential competitive pressures from white box solutions. Additionally, while operating margins have been impressive, largely due to non-cash accounting changes, the potential for further margin expansion appears limited. Nonetheless, the anticipated increase in capital spending by key clients like Meta, Microsoft, and Oracle supports the Buy rating, as these investments are expected to bolster Arista’s growth trajectory in the near term.
In another report released today, KeyBanc also maintained a Buy rating on the stock with a $145.00 price target.