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  • Arista Networks (ANET): Reasons and Consequences of the Analyst Downgrade

    Arista Networks (ANET): Reasons and Consequences of the Analyst Downgrade

    Arista Networks (ANET) is making headlines following news that a financial analyst firm, Piper Sandler, downgraded its rating from “Overweight” to “Neutral.”

    This change can significantly impact the US stock company’s prospects and has left investors and market watchers curious about its implications.

    Let’s delve into the details of this scenario, understand the reasons behind the downgrade, and explore the possible outcomes for Arista Networks.

    Arista Networks: A Quick Overview

    Arista Networks is a renowned player in the data-driven, client-to-cloud networking sphere, offering top-notch platforms for large data centers, campus environments, and routing spaces.

    Their award-winning platforms deliver availability, agility, automation, analytics, and security through an advanced network operating stack.

    The recent downgrade by Piper Sandler has put Arista under the spotlight, raising questions about its future performance and growth potential.

    Piper Sandler: The Analysts Behind the Rating

    Piper Sandler is a leading name in the financial analysis industry, known for its accurate and comprehensive assessments.

    Their ratings significantly influence investor sentiment and stock market trends. Their recent decision to downgrade Arista Networks from “Overweight” to “Neutral” has undoubtedly sent ripples across the financial sphere.

    The Downgrade: What Does it Mean?

    The shift from an “Overweight” rating to a “Neutral” one reflects a significant shift in Piper Sandler’s perception of Arista’s prospects.

    This downgrade suggests that the analysts believe that Arista’s stock, which was previously expected to outperform the market, is now anticipated to perform at par with other stocks in the market.

    Arista’s Response: Innovating in a Challenging Climate

    Despite the downgrade, Arista has continued to progress and innovate. One of the company’s significant recent developments includes the introduction of the next-generation 7130 Series for ultra-low latency switching that accelerates 25G networking.

    This new system addresses the needs of 25G market data distribution and High-Frequency Trading (HFT) environments, demonstrating Arista’s commitment to staying ahead in the technology game.

    Is the Downgrade Justified?

    The downgrade of Arista’s rating by Piper Sandler was reportedly due to concerns about slower tech spending. However, whether this downgrade is justified can only be determined by observing Arista’s performance in the coming quarters.

    It will be interesting to see how the company’s innovative strategies and developments pan out in the face of these market predictions.

    The Future of Arista: Predictions and Possibilities

    While the downgrade may cast a shadow on Arista’s immediate future, it does not necessarily dictate the company’s long-term prospects.

    With their continuous advancements and innovations, Arista is well-positioned to navigate through the current market challenges. The company’s performance in the coming quarters will offer a clearer picture of its trajectory and potential growth.

    Conclusion: The Takeaway for Investors

    While the market may currently view Arista (ANET) through the lens of Piper Sandler’s downgrade, it is crucial for investors to make well-informed decisions based on a comprehensive analysis of the company’s performance, potential, and market trends.

    A single downgrade does not define a company’s future, and with its ongoing innovations and developments, Arista Networks may yet surprise market watchers and investors alike.

  • Q4 & Fiscal 2021 Results: Arista Networks Inc. (ANET) stock Advances Further After Hours

    On February 14, Arista Networks Inc. (ANET) declared its financial results for the fourth quarter and full-year 2021. Following the release, the stock advanced further in the after-hours session.

    The anticipation of the results had already caused investors to flock towards the stock in the regular trading session. Hence, ANET traded at a heavy volume of 4.2 million in the regular session to gain 1.57%. The stock closed the session at a value of $122.82 per share. Consequent to the announcement, ANET continued to rise in the after-hours, adding 7.31% or $8.98. Therefore, the stock reached up to $131.80 per share value in the after-hours on Monday.

    The cloud networking solutions provider, Arista Networks Inc. was founded in 2004. Currently, its 307.28 million outstanding shares trade at a market capitalization of $37.16 billion. ANET stock stands at a year-to-date loss of 14.56% while it increased by 51.95% last year.

    ANET’s Q4 2021

    In Q4 2021, the company had revenue of $824.5 million, marking a YOY growth of 27.1%.

    Moreover, the company reported a non-GAAP net income of $262.4 million in Q4 2021. Comparatively, the non-GAAP net income was $197.7 million in the year-ago period. Thus, the non-GAAP net income per diluted share was $0.82 and $0.62 in Q4 2021 and 2020, respectively.

    Full-year 2021

    For the full year 2021, the company reported revenue of $2.95 billion, which marks a YOY increase of 27.2%.

    Furthermore, ANET had a non-GAAP net income of $915.0 million in fiscal 2021, against $718.4 million in the previous year. Therefore, the non-GAAP net income per diluted share was $2.87 and $2.26 in fiscal 2021 and 2020, respectively.

    ANET’s Future Outlook

    For Q1 2022, the company expects revenue to be in the range of $840 million and $860 million. Additionally, the expected non-GAAP gross margin is 63-64% and operating margin 38% approx.

    Four-for-One Stock Split

    Previously, on November 01, 2021, the company had announced its intention for a four-for-one stock split. The stock split’s completion was announced on November 19. As part of the stock split, ANET’s shareholders (record November 11) received additional three shares for each share held. The split-adjusted basis trading of the stock commenced on November 18, 2021.

    Conclusion

    On Monday, ANET surpassed both its revenue and earnings expectations. Happy with the earnings report, the investors drove the stock up in the after hours. In conclusion, the stock surged in the after-hours following the beat earnings results on Monday.