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On Wednesday, Needham analysts revised their price target for Arista Networks (NYSE:ANET) shares, reducing it to $130 from $145, while maintaining a Buy rating on the stock. According to InvestingPro data, the company maintains a "GREAT" financial health score and has seen a significant 10.33% return over the past week, though current analysis suggests the stock is trading above its Fair Value. The adjustment came after Arista Networks reported robust first-quarter earnings for 2025 and increased their second-quarter guidance above the consensus estimates. Despite this positive performance, the company has chosen to maintain its full-year 2025 revenue growth forecast at 17%, suggesting a flat revenue outlook for the second half of the year, which is below the consensus expectations.
The company’s first-quarter results were notably strong, with a non-GAAP operating margin of 48.7%, marking the third consecutive quarter it has exceeded 47%. As a prominent player in the Communications Equipment industry, Arista boasts impressive metrics, including a 64.13% gross profit margin and $7 billion in revenue over the last twelve months. This performance was bolstered by the progress of Arista’s four AI back-end customers, who are on track to scale up to 100,000 GPUs by the end of the year and are expected to contribute $750 million in revenue.
However, Arista Networks’ management has expressed caution regarding the second half of 2025, citing the potential impact of high U.S. tariffs that could come into effect as early as July. The management’s prudence is a response to the uncertainty surrounding these tariffs, which could significantly affect the company’s business and gross margins. Like its industry peers, Arista Networks is limited in its options until there is more clarity on the tariff policy.
In light of these considerations, Needham analysts have slightly increased their estimates for the fiscal years 2025 and 2026. Nevertheless, the price target for Arista Networks’ stock has been lowered to $130 due to a broad compression of multiples across the technology sector. The analysts’ decision reflects the balance between Arista’s strong current performance and the potential challenges posed by the looming tariff uncertainties. For deeper insights into Arista’s valuation and growth prospects, InvestingPro subscribers can access comprehensive research reports, including detailed financial analysis and 13 additional exclusive ProTips about the company’s performance and outlook.
In other recent news, Arista Networks reported its first-quarter earnings for 2025, exceeding analysts’ expectations. The company achieved an earnings per share (EPS) of $0.65, surpassing the forecasted $0.59, and posted revenue of $2.01 billion, above the anticipated $1.97 billion. Despite these strong results, Arista Networks’ stock experienced a decline in after-hours trading. Citi analysts have responded by raising the price target for Arista Networks to $97, maintaining a Buy rating, due to the company’s robust performance and positive outlook. The firm remains optimistic about Arista’s future, projecting strong growth in data center spending and an accelerated achievement of the company’s $10 billion revenue target. The company’s management has indicated confidence in reaching this milestone sooner than previously expected, driven by its strong position in the AI networking market. Additionally, Citi has increased its earnings per share estimates for Arista Networks for the fiscal years 2025, 2026, and 2027. Arista Networks has also announced a new $1.5 billion stock repurchase program, reflecting confidence in its financial health and future prospects.
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