Keep an eye on oversold shares of Arista Networks (ANET).
After slipping from about $133.57 to $85.52, the stock has become excessively oversold. It’s also over-extended on RSI, MACD, and Williams’ %R. From its current price of $85.52, we’d like to see it initially retest $105 a share. Helping, analysts at UBS just upgraded the networking stock to a buy rating with a price target of $115 a share.
“Our upgrade is supported by our view that investments in data center [capital expenditures] will remain strong growing at ~a 25% CAGR through 2027,” said the firm, as quoted by CNBC. “In addition, an acceleration in key Arista metrics including ‘purchase commitments’, deferred revenue’, and ‘finished goods inventory’ last quarter provides revenue recognition support that the company’s CY25 revenue guidance of 17% is overly conservative relative to our 19% forecast and analysis that suggests growth could approach 25%.”
Plus, recent earnings and guidance were strong.
EPS of 65 cents beat by eight cents. Revenue of $1.93 billion, up 25.3% year over year, beat estimates by $30 million. Analysts were looking for EPS of 57 cents on revenue of $1.9 billion. As for guidance, Arista expects first-quarter revenue to be between $1.93 billion and $1.97 billion, with the midpoint of $1.95 billion above estimates of $1.91 billion.
In short, weakness is an opportunity with ANET.
Sincerely,
Ian Cooper
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