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Investing.com - KeyBanc raised its price target on Arista Networks (NYSE:ANET) to $145.00 from $115.00 on Wednesday, while maintaining an Overweight rating on the networking equipment maker. The stock, currently trading near its 52-week high with a P/E ratio of 58, appears overvalued according to InvestingPro Fair Value metrics.
The price target increase follows Arista’s second-quarter results, which demonstrated strong artificial intelligence demand, expanding opportunities from NeoClouds, and growing traction in the Enterprise and Campus markets. The company’s impressive 26% year-over-year revenue growth and 34% return on equity support this optimistic outlook.
KeyBanc cited several factors supporting its bullish outlook, including expectations that Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT) capital expenditures will continue ramping up, and projections that overall Hyperscale cloud capital expenditure will rise more than 50% in 2025 and over 20% in 2026.
The firm also noted increased opportunities from emerging segments that position Arista Networks favorably in the market.
Despite acknowledging the stock’s expensive valuation, KeyBanc justified its premium rating by pointing to Arista’s potential for continued mid-teens percentage growth and what it described as "best-in-class margins."
In other recent news, Arista Networks reported a robust second-quarter performance, with earnings per share of $0.73, surpassing both Goldman Sachs and FactSet consensus estimates of $0.65. The company also exceeded revenue expectations, reporting $2.20 billion against the anticipated $2.1 billion. Following these results, Arista Networks has increased its fiscal year 2025 revenue growth guidance from 17% to 25% year-over-year. This adjustment was noted by JPMorgan, which raised its price target for the company to $150, citing the upward revision and AI growth prospects. Needham also raised its price target to $155, maintaining a Buy rating, as Arista’s guidance for the second half of the year suggests significant growth. Barclays (LON:BARC) echoed this sentiment, increasing its price target to $151 and highlighting the company’s better-than-expected second-quarter earnings. Meanwhile, Goldman Sachs reiterated its Buy rating with a $155 price target, emphasizing the strong quarterly results. Raymond (NSE:RYMD) James maintained its Market Perform rating, observing that Arista’s performance obligations and bookings were in line with previous reports. These developments reflect the company’s positive trajectory and have prompted several analyst firms to adjust their outlooks.
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