It may have been Arista Networks Inc. It needs a “near-perfect” earnings report to meet Wall Street standards given its “near-peak valuation,” according to a Piper Sandler analyst.
However, Arista shares ANET,
It fell about 7% in the extended session on Thursday, as the networking giant beat expectations with its latest revenue and top-line forecasts, even as it easily beat earnings expectations.
“Although margins are amazingly strong, it is the timing of shipments that we value [greater than] “$100 million, has led to some reported disappointment,” Piper's James Fish wrote in a note to clients.
Since some of the revenue recognized will be pushed into the current quarter, he added that the first-quarter outlook, which was in line with expectations on paper, could actually be considered weaker than expected because the consensus had not taken that push into account. -External.
The networking giant is forecasting revenue of $1.52 billion to $1.56 billion for the current quarter, while analysts tracked by FactSet were modeling $1.53 billion on the top line.
Arista executives also expect a gross margin of 62%, while the consensus opinion implies a gross margin forecast of 63%.
For the full year, management reiterated a revenue growth target of 10% to 12%.
“The overall guidance for 2024 that was repeated may be viewed by many as conservative, but we view it as prudent given the cyclicality of the industry, uncertainty around AI Ethernet shipments, and the introduction of a new CFO,” Fish wrote, while maintaining a neutral rating on the stock.
Evercore ISI's Amit Daryanani wrote that the “lack of revenue upside” was likely to drag the stock price down in the aftermarket, though he said the company “remains well positioned to sustain high-teens revenue growth over “Over the next several years we will likely do so with better end-market diversification than we have seen historically.”
Daryanani added that “the AI opportunity continues to look like a significant upside lever” while focusing on management's comments that Arista won four out of five bids it participated in, “while remaining in the fabric of InfiniBand that it lost.”
In the fourth quarter, Arista reported net income of $613.6 million, or $1.92 per share, compared to net income of $427.1 million, or $1.35 per share, in the same period a year earlier. On an adjusted basis, Arista reported earnings per share of $2.08, up from $1.41 a year earlier and above the FactSet consensus of $2.08.
Revenues were $1.54 billion, up about 2% from the previous year. Analysts were looking for $1.53 billion.
“We are cautiously optimistic about achieving our AI revenue target of at least $750 million in AI networks in 2025,” CEO Jayshree Ullal said on the earnings call.
Arista stock is up 36% over three months and 111% over 12 months.
Networking Competition Cisco Systems Inc. CSCO,
Published quarterly results on Wednesday afternoon.
