By Senad Karaahmetovic
Shares of Arista Networks (NYSE:ANET) are trading more than 5% higher in premarket trading on Tuesday after the company’s Q3 revenue outlook topped consensus.
Arista reported an adjusted EPS of $1.08 on revenue of $1.05 billion to easily top the consensus of EPS of $0.91 on revenue of $979.1 million. Strong results were fueled by strong product revenues, which came in at $885.8 million, nearly 10% higher than the consensus.
For this quarter, ANET is calling for revenue of $1.03 billion to $1.08 billion, higher than the $995.3 million consensus. The company also said it sees an adjusted operating margin of about 39%, better than the 36.8% consensus.
A Rosenblatt analyst said ANET delivered “strong results”.
“We are reiterating our Buy rating on ANET after the strong 2Q22 beat and raise. Our numbers are increasing after 2Q EPS of $1.08 exceeded our estimate by 19%, and the company guided 3Q revenues up ~40% y/y without any benefit from deferred revenues. We are raising our price target to $155, from $140, based on 30x our 2024 EPS forecast,” he wrote in a client note.
An Oppenheimer analyst said ANET was able to defy macro concerns after it managed to generate over $1 billion in revenues in Q2.
“The company continues to benefit from CapEx spend at Cloud Titans (Microsoft and Meta top customers), with demand visibility still into midCY23, as well as share gains at enterprise customers… Despite the risk of revenue pushout into FY23 due to component shortages, the strong demand environment, and Arista’s execution put it on track to deliver topline well ahead of its >30% FY22 growth target. We like Arista's LT growth opportunity, but remain on the sidelines on valuation. Adjusting estimates for results/guidance,” the analyst told clients.