The networking hardware provider has been on a tear this year, and the risks now look more balanced, says Piper Sandler.
Arista Networks shares were trading early lower Wednesday afternoon after Piper Sandler analyst James Fish issued cautionary comments on the outlook for network infrastructure spending.
Arista, which builds networking hardware used by both corporate data centers and cloud computing vendors, counts Microsoft and Meta Platforms as its largest customers. Fish wrote in a Wednesday note that the downgrade reflects his concerns about overall 2024 networking spend by both enterprise and cloud customers. He also thinks that after this year’s surge in the stock price, the risk-reward for investors now looks more balanced.
But Fish also noted that Arista is trading well above its historical average valuation. He thinks that its stock price already embeds double-digit 2024 growth, “despite cloud digestion, limited visibility and enterprise budget concerns.”
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