Arista Networks: A Disruptive Player in the Ethernet Switching Industry
Arista Networks is an American computer networking company headquartered in Santa Clara, California. The company has been a leading competitor in the cloud networking market for over a decade, disrupting the traditional networking industry with innovative solutions for cloud providers.
Over the last decade, Arista Networks has established itself as a disruptor in the ethernet switching industry. One of its key strengths lies in its ability to disaggregate software and hardware, offering large customers more flexibility to build network infrastructures that better correspond to their needs. This strategy has enabled the company to expand its market share significantly.
In 2014, Arista Networks had a 7.8% market share in the cloud networking market. However, by 2021, it had surpassed this number with a staggering 16.3% market share. The company’s success can be attributed to its proprietary Extensible Operating System (EOS), which powers its entire portfolio of switching and routing products.
Arista Networks’ EOS software allows clients to deploy seamless, fast, and efficient networks across public, private, and hybrid-cloud environments. This innovative approach has enabled the company to attract big-name customers such as Microsoft and Facebook.
Microsoft accounts for approximately 23% of Arista Networks’ annual revenue, which means that the growth trajectory of the company should closely correlate with Microsoft’s results. Between 2011 and 2020, Arista Networks’ revenue grew at an average rate of 36.5%, while its stock soared at a 29% average rate between its 2015 IPO and the end of 2020.
Arista Networks’ Recent Announcements
In addition to its impressive financial performance, Arista Networks has made several recent announcements that have caught investors’ attention. The company announced plans to buy back up to $1 billion of its stock, which was approved by its board of directors. Moreover, the company will be implementing a four-for-one stock split, effective November 11, 2021.
This move is seen as an attempt to make Arista Networks’ shares more accessible to a broader base of investors by lowering the price. Over the past two years, Revenue has grown 16%, and earnings per share year over year are up 19.5%.
Analyzing Indicators and Metrics
To gain a deeper understanding of Arista Networks’ performance, we will analyze several key indicators and metrics.
- Wall Street Analysts’ Opinions: The consensus among analysts is that Arista Networks is still slightly undervalued at current levels.
- 52-week High and Low Boundaries: Technically speaking, Arista Networks has left a huge GAP on the daily chart, with a range priced at $413 and $482 levels. The trend is UP, but it’s essential to be cautious of potential pullbacks.
- Vantagepoint A.I. Forecast (Predictive Blue Line): This forecast utilizes Vantagepoint’s patented Neural Network and Intermarket Analysis to arrive at its value. It has been observed that when the predictive blue line moves above the black line, an UP-forecast entry opportunity arises.
Intermarket Analysis
To gain a deeper understanding of Arista Networks’ price action, we must examine the key drivers behind it. According to Vantagepoint Software’s Intermarket analysis, Arista Networks is positively and negatively correlated with various assets, including Crude Oil, The Dow Jones Index, S&P 500, Natural Gas, and other top-performing ETFs.
This complex relationship highlights the importance of understanding intermarket correlations when trading or investing in Arista Networks. By analyzing these relationships, traders can identify potential opportunities and risks associated with the company’s stock price.
Recommendation
Based on our analysis, we recommend following the A.I. trend analysis and practicing good money management on all trades. Traders should be cautious of potential pullbacks and consider selling PUTS to collect premium during anticipated weakness and selloffs.
We will re-evaluate our recommendation based on new Wall Street Analysts’ Estimates, 52-week high and low boundaries, Vantagepoint A.I. Forecast (Predictive Blue Line), Neural Network Forecast, Daily Range Forecast, and other relevant indicators and metrics.
Disclaimer
Trading involves a high degree of risk, and it’s not prudent or advisable to make trading decisions that are beyond one’s financial means or involve trading capital that can be lost. Vantagepoint’s marketing campaigns do not constitute trading advice or an endorsement of any trading methods, programs, systems, or routines.