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Piper Sandler analysts upgraded Arista Networks (NYSE:ANET) to Overweight from Neutral, raising the firm’s price target on the stock to $164 from $126.
In a note to clients, they said that following Arista’s Q3 earnings earlier this week, its management team hosted an Analyst Day, focusing the message around 2023 potential, sustainability of cloud customer demand, a renewed push on enterprise share gains, and mostly positive updated long-term business model targets.
“While there have been positive “breadcrumbs” along the way, and we’re admittedly slightly late, following the event, we are more confident in Arista’s visibility and sustainable growth trajectory and are upgrading to Overweight,” the analysts wrote.
The analysts outlined the core reasons for the upgrade, including backlog remaining at an all-time high, the 2023 growth target of 25% coming in 10% above current expectations, Arista’s exposure to hyperscalers, and Arista continuing to “gain share in the enterprise over incumbents.”
“Core to our thesis is the flush of backlog that is causation for >25% 2023 growth, high-quality and resilient customer base (including hyperscalers) in a challenging macro-environment, enterprise share gains, launch of new solutions (including SD-WAN & NaaS), 400G/800G cycle in which Arista maintains top-share, margin raise from best-in-class team, and positive risk-reward heading into 2023,” the analysts added.
