Citi raises Arista Networks price target to $97, maintains Buy

On Wednesday, Citi analysts updated their stance on Arista Networks (NYSE:ANET), increasing the price target to $97.00 from the previous $92.00 while reiterating a Buy rating for the company’s stock. The adjustment follows Arista Networks’ performance in after-hours trading, which saw a 4% decline despite the company reporting better-than-expected results and reaffirming its financial outlook for 2025. According to InvestingPro data, ANET has demonstrated strong momentum with a 10.33% return over the past week, though current analysis suggests the stock may be trading above its Fair Value.

The company’s recent earnings beat and positive guidance come amid a challenging macroeconomic environment, yet Arista Networks continues to show robustness in its enterprise and cloud segments. With an impressive gross profit margin of 64.13% and a return on equity of 33%, InvestingPro analysis reveals ANET’s strong financial health, earning a "GREAT" overall rating. Citi’s analysis acknowledges the stock’s significant compression this year, attributing the decline to market concerns over a potential slowdown in capital expenditures by hyperscale companies and increasing competition from white box providers.

However, Citi remains optimistic about data center spending, projecting strong growth in the coming years based on recent reports from the Big 4 hyperscale companies. Arista Networks’ management has also indicated a positive outlook for 2026, suggesting that the company may achieve its $10 billion revenue target ahead of schedule. The current stock price is believed to be supported by a price-to-earnings multiple of around 30 times, which seems to have factored in investor concerns.

The research firm anticipates that Arista Networks will offer attractive prospects for investors in the second half of 2025, with no significant impact expected from AI restrictions and no exposure to the Chinese market, unlike AI compute semiconductor companies. Citi has increased its earnings per share estimates for Arista Networks for the fiscal years 2025, 2026, and 2027 by 4%, 7%, and 6%, respectively. The new price target of $97 is based on a consistent 32 times price-to-earnings multiple applied to the revised calendar year 2026 EPS estimates.

In other recent news, Arista Networks reported its first-quarter earnings for 2025, exceeding analysts’ expectations with an EPS of $0.65, compared to the projected $0.59. The company also surpassed revenue forecasts, posting $2.01 billion against an expected $1.97 billion, marking a 27.6% year-over-year revenue increase. Despite these strong financial results, the company’s stock experienced a decline in after-hours trading. Arista Networks highlighted its continued focus on AI networking infrastructure, which contributed significantly to its revenue growth. The company repurchased $787.1 million of its stock during the quarter, reflecting a strategic use of capital. Analysts from firms like UBS and Evercore discussed the company’s momentum in AI and cloud infrastructure, with Arista maintaining a robust presence in these markets. Looking ahead, Arista Networks projects second-quarter revenue of $2.1 billion and anticipates achieving a full fiscal year 2025 gross margin between 60% and 62%. The company remains focused on operational discipline and innovation, aiming to reach a $10 billion revenue milestone sooner than previously expected.

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