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On Tuesday, Rosenblatt Securities analyst Mike Genovese upgraded shares of Arista Networks (NYSE:ANET) from Neutral to Buy, setting a price target of $85.00. The upgrade follows a positive assessment of the company’s potential to navigate a macroeconomic slowdown and secure significant customer wins. According to InvestingPro data, Arista demonstrates strong financial health with a "GREAT" overall score and maintains more cash than debt on its balance sheet, supporting its resilience in challenging market conditions. For deeper insights into Arista’s financial strength, investors can access 15+ additional ProTips and comprehensive analysis through InvestingPro’s detailed research reports.
Genovese cites recent successes of Calix (NYSE:CALX), Inc. as a catalyst for reevaluating other companies capable of withstanding a macro slowdown without the need for downward adjustments to their second half of 2025 and full year 2026 forecasts. Arista Networks emerged as a company likely to outperform expectations due to larger than anticipated customer wins at major tech firms such as Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL), and Google (NASDAQ:GOOGL). The company’s strong market position is reflected in its impressive 19.5% revenue growth and 64.13% gross profit margin over the last twelve months, as reported by InvestingPro.
The analyst notes that increased tariffs have made White Box switching options from China less appealing, which has played to Arista’s advantage. Additionally, Arista’s competitive edge is bolstered by its strong lineup of switches that are compatible with Linear-drive Pluggable Optics (LPO) transceivers.
Genovese also mentions that his previous concerns, which led to a downgrade over a year ago, have largely played out. The concerns were centered around the diminishing value of Arista’s EoS software in AI factory data centers and heightened competition from players like NVIDIA (NASDAQ:NVDA) and Cisco (NASDAQ:CSCO). However, with recent quarters unfolding as expected and the company’s operating margin guidance for 2025 being approximately 400 basis points below its 2024 actual operating margin, the analyst finds Arista’s stock more compelling, especially with its valuation sitting at 25x to 30x FY+2 EPS.
The new price target of $85 is based on 30 times Rosenblatt’s slightly below consensus 2026 EPS forecast. Genovese highlights that for most companies in their coverage, they are applying theoretically reduced 2026 EPS for price targets due to macro risks. However, for Arista Networks and Calix, actual EPS figures are being used to set price targets, as these companies are perceived to be less likely to face cuts due to economic slowdowns. InvestingPro analysis suggests the stock is currently trading above its Fair Value, with a P/E ratio of 34.49 and strong financial metrics including a current ratio of 4.36, indicating excellent liquidity. Investors seeking detailed valuation analysis and comprehensive financial metrics can access the full Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Arista Networks has been the focus of several analyst updates. JPMorgan reiterated its Overweight rating on Arista Networks, maintaining a price target of $140.00, and included the company on its Analyst Focus List. The firm anticipates Arista’s earnings will surpass current consensus estimates in 2025, with an acceleration in revenue growth expected in 2026 and 2027. Meanwhile, Evercore ISI has adjusted its price target for Arista Networks from $130.00 to $100.00, although it still maintains an Outperform rating. Despite recent challenges, Evercore ISI remains optimistic about Arista’s ability to meet its $750 million back-end AI revenue target and achieve growth rates in the low 20% range by 2025. The firm also maintained its $130.00 price target in a separate update, emphasizing confidence in Arista’s performance amid executive changes. Additionally, the launch of Nexthop AI by former Arista COO Anshul Sadana has introduced a new competitor in the networking space, which Evercore ISI plans to monitor closely. These developments highlight the dynamic landscape surrounding Arista Networks and the varied perspectives from analysts on its future prospects.
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