Arista shares recently traded at $257.01, up 18.9%, and have climbed 26% year to date.
Third quarter revenue totaled $605.4 million, compared to the FactSet analyst consensus of $580 million. And adjusted earnings per share came in at $2.42 per share, compared to the analyst consensus of $2.22 a share.
“We positively view the core cloud customer base stabilizing and returning to growth, and believe that Arista's more embryonic products and feature sets in areas like the campus market, security, and router replacements can provide a more diversified income base in the longer term,” Morningstar analyst Mark Cash wrote in a commentary. “With more confidence in revenue growth for the coming quarters and years, we are raising our fair value estimate to $255 per share from $245.”
Analysts at William Blair said Arista has hit an inflection point, with management’s tone improving “night-and-day” from recent quarters, Bloomberg reported.
Management showed confidence in upcoming opportunities, including hyperscalers and 400G, carriers and 5G, enterprise share gains and adjacent areas such as security, Piper Sandler analysts said, according to Bloomberg. To be sure, the analysts also said caution is in order before next year’s product cycle.
Jefferies analysts also had qualms. They said they’re staying on the sidelines because Arista has a valuation that’s “not-so-cheap,” according to Bloomberg. And while future guidance was promising, issues remain, including customer concentration and “lumpiness risk,” the Jefferies analysts said.