KeyBanc initiates Arista Networks stock with overweight rating

Investing.com - KeyBanc initiated coverage on Arista Networks (NYSE:ANET) stock Wednesday with an overweight rating and a price target of $115.00. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.54 out of 5 and stands as a prominent player in the Communications Equipment industry.

The firm cited Arista’s leadership position in cloud and data center networking, highlighting its industry-leading organic growth that has been compounding for the past decade and is expected to continue. This growth trajectory is evidenced by the company’s impressive 22.3% revenue growth over the last twelve months, with 17 analysts recently revising their earnings expectations upward.

KeyBanc expects Arista to perform well as the industry shifts toward AI and hyperscalers continue their spending patterns, with the company’s established relationships with cloud titans potentially showing accelerating growth in 2025.

The firm also noted Arista’s expansion into the enterprise market, which increases its total addressable market, creating additional growth opportunities beyond its core business.

Despite trading at approximately 24.7 times KeyBanc’s 2026 adjusted EBITDA estimates and 27.2 times 2026 free cash flow per share, the firm believes Arista’s positive macro backdrop, growth expectations, and rule-of-40 profile warrant a premium valuation, making the recent pullback an attractive buying opportunity. InvestingPro analysis reveals 12 additional key insights about ANET’s valuation and growth prospects, available with a subscription.

In other recent news, Arista Networks has seen its stock price target raised to $110 from $105 by Evercore, which maintained an Outperform rating. The firm anticipates a revenue guidance increase to at least 20% when Arista reports its second-quarter results. Evercore also highlighted potential growth from Meta (NASDAQ:META)’s upcoming networking architecture showcase, which could benefit Arista. Additionally, Citi reaffirmed its Buy rating on Arista with a $112 price target, despite concerns about competition in the Ethernet AI back-end switch market. Citi noted that Arista’s market share in this area doubled by FY2024, and the expanding market could benefit the company. In leadership news, Arista appointed Todd Nightingale as President and COO, effective July 1, 2025. Nightingale’s extensive tech industry experience is expected to be a valuable asset for the company. Finally, at Arista’s 2025 Annual Meeting of Stockholders, key proposals were approved, including the election of directors and the ratification of Ernst & Young LLP as the independent registered public accounting firm.

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