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Why Arista (ANET) Appears a Solid Investment Proposition Now

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Shares of Arista Networks, Inc. (ANET - Free Report) have risen 23.3% over the past year, driven by solid demand trends and healthy customer additions. Its current-fiscal earnings estimates have moved up 40.1% over the past year, while that for the next fiscal has appreciated 41.7% over the same time frame, implying healthy growth potential. Despite intense market volatility, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Investment Research
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Growth Drivers

Arista continues to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. It is well-poised for growth in data-driven cloud networking business with proactive platforms and predictive operations.

The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. It is increasingly gaining market traction in 200- and 400-gig high-performance switching products. It remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.

With customers deploying transformative cloud networking solutions, it has announced several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge. It has introduced cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Google Hangouts, Microsoft Teams and Zoom.

Arista has introduced a network observability software, DANZ Monitoring Fabric (DMF), on its switching platforms for enterprise-wide traffic visibility and contextual insights. The offering enables mission-critical monitoring for enterprise traffic while improving efficiencies and reducing operating expenses through the adoption of modern cloud networking principles. DMF enables IT operators to extensively monitor all user, device and application traffic by gaining complete visibility into physical, virtual and container environments. The DMF offering is based on Arista’s popular switching platforms with optional advanced nodes.

The buyout of Awake Security, a Network Detection and Response platform provider that combines artificial intelligence with human expertise to autonomously hunt and respond to insider and external threats, has strengthened its market position. The company expanded its cognitive campus portfolio with new platforms, including the 750 Series modular chassis and the 720 Series 96 port fixed switch. Arista announced unified edge innovations across wired and wireless networks for its Cognitive Campus Edge portfolio for Enterprise Workspaces. It has also introduced an enterprise-grade Software-as-a-Service offering for the flagship CloudVision platform.

Arista continues benefiting from the expanding cloud networking market, driven by strong demand for scalable infrastructure. In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance and programmability, enabling integration with third-party applications for network management, automation and orchestration. It offers one of the broadest product lines of datacenter and campus Ethernet switches and routers in the industry. Arista provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency. The company also continues to innovate in areas such as deep packet buffers, embedded optics and reversible cooling.

The stock delivered an earnings surprise of 10.1%, on average, in the trailing four quarters. With a long-term earnings growth expectation of 18.6%, this stock appears to be an enticing investment option for the volatile market.

Other Key Picks

TESSCO Technologies Incorporated (TESS - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 61.9%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 31% since September 2021.

TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.

Spirent Communications plc (SPMYY - Free Report) carries a Zacks Rank #2. Earnings estimates for the current year for the stock have moved up 10.8% since September 2021, while that for the next year is up 11.8%.

Founded in 1936 and headquartered in Crawley, the United Kingdom, Spirent offers a comprehensive, end-to-end solution that validates forwarding performance, latency and functional capabilities in an integrated approach that reduces the cost of ownership. It is a leading provider of Ethernet validation solutions in the market.

Harmonic Inc. (HLIT - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 12.9% since February 2022.

Harmonic provides video delivery software, products, system solutions and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit Internet service to consumers' homes and mobile devices.

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