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Arista Networks stock (NYSE:ANET) joined the entire Technology sector lower Tuesday morning -- down 4.9%, though its drop came despite a Monday postmarket profit beat.
The report also featured solid guidance for first-quarter revenues, spurring some analysts to raise estimates in turn.
Still, the stock declined as investors headed into the quarter with some pretty high expectations.
Despite the upbeat results, "the risks into 2024 are high," BofA analyst Tal Liani said even while giving a bump to revenue and EPS estimates for 2024 through 2026.
"Arista remains the best Networking play on the growing investment in AI and non-AI infrastructure, particularly within the cloud provider vertical, and the company’s 12% 2024 growth guidance seems conservative," Liani wrote.
"However, with Cloud Titan up 25% YoY and Enterprise up 50.5% in 2023, both supported by elevated backlog, the visibility into 2024 is lower than in prior years, especially given the high correlation of switching demand to the current declines in server orders."
BofA now sees Arista's 2024 revenue coming in at $6.587B vs. a previous forecast for $6.562B.
Seeking Alpha analyst and Investing Group leader Daniel Jones noted recently that the stock was "awfully pricey" heading into the earnings report.
It was a solid end to the year but expectations were high, William Blair analyst Sebastien Naji said in reaction: Arista still trades at 31 times calendar 2025 earnings.
"Nonetheless, Arista continues to outperform its peers (most networking vendors expect growth to dip negative this year) driven by strategic relationships with cloud titans and continued enterprise market share gains," Naji wrote. "In the near term, we expect Arista’s strong earnings, high free cash flow margin, and best-in-class financial model should help counter the impact of slowing revenue growth."
More on Arista
- Arista Networks, Inc. (ANET) Q4 2023 Earnings Call Transcript
- Arista Networks: Shares Are Looking Awfully Pricey Heading Into Earnings
- Arista Networks: Incredible Execution And AI Tailwinds Justify High Price (Rating Upgrade)
- Arista Networks tumbles despite strong guidance, Q4 results
- Arista Non-GAAP EPS of $2.08 beats by $0.37, revenue of $1.54B in-line