Arista Networks, a next-generation IT networking company, experienced a notable increase in its share price, rising over 16% during the week, as reported by S&P Global Market Intelligence. This surge was primarily attributed to a positive change in an analyst’s recommendation.
On Tuesday, Mike Genovese of Rosenblatt Securities revised his recommendation for Arista Networks from sell to neutral, setting a new price target of $85 per share. Genovese’s decision was influenced by two main factors. First, he highlighted the strong performance of Arista’s peer, Calix, during its first quarter, suggesting potential resilience during a macroeconomic slowdown, which could similarly apply to Arista.
Additionally, he stated that the previous sell thesis was no longer applicable. Arista has demonstrated increased competitiveness compared to foreign rivals, particularly those in China. Tariffs affecting Chinese products have actually boosted the attractiveness of Arista’s offerings. Furthermore, Genovese’s fieldwork indicated that Arista secured larger-than-expected contracts with hyperscaler clients, an important segment for the company.
While the impact of tariffs may be diminishing, Arista remains well-positioned in a growing sector, where clients require fast and efficient networking services. These services are often essential, potentially enabling the company to withstand an economic slowdown effectively.
