Arista Networks (NASDAQ: ANET) released its Q4 2021 earnings report on Monday, February 14, 2022, after market close. Shares jumped after the company reported earnings and revenue that topped estimates.
What to look for: The company demonstrated resilience and flexibility in 2021 and maintained operational excellence despite the industry-wide challenges managing to deliver its first billion-dollar cash flow. Arista hit record milestones in 2021 in innovation, earnings and diversified client momentum. The company is currently better placed in the fast-growing networking sector.
Earnings: Stockearning’s Estimated EPS for fiscal Q4 2021 was expected to be $0.74 per share, but the company reported adjusted EPS of $0.92 per share relative to $0.62 per share a year ago. in the third quarter, the company produced an earnings surprise of 3.48% at $0.6 per share. Historical EPS Performance indicates that the company has, in the past 12 quarters, topped estimates in all quarters (100%). Net income was $293.3 million or $0.75 per share compared to $183 million or $0.58 per share a year ago. The company reported GAAP net income of $840.9 million or $2.63 per diluted share and non-GAAP net income of $915 million or $2.87 per diluted share for the full year.
Revenue: The cloud computing company reported revenue of $824.5 million, beating Wall Street estimates of $790.6 million. Revenue was up 10.1% QoQ and 27.1% YoY. In addition, the company reported revenue of $2.95 billion for the full year, representing a YoY increase of 27.2%. Arista expects revenue to range between $840 million and $860 million for the quarter ending April 2022, with a non-GAAP gross margin of 63%-64% and a non-GAAP operating margin of around 38%.
Stock movement: Arista Networks shares have gained 18.4% since the company released its third-quarter earnings. Interestingly, the company’s shares have been UP 17 times out of the past 30 quarters. So, the historical price reaction suggests a 56% probability of the share price going UP following the fiscal Q4 2021 earnings release. According to the Stockearning algorithm, the predicted first-day move is +/-8%, while the predicted move on the seventh day is +/-9%.
What analysts are saying: Loop Capital analyst Fahad Najam commenced coverage in ANET with a Buy rating and price target of $157 while also stating that the stock was his Top 2022 Pick. According to the analyst, Arista is a networking business with considerable prospects in the hyper-scale Data Center Switching sector and an increasing total target market expansion in the corporate Campus Switching market. In addition, according to Najam, Arista has the greatest management team in the industry, and the company's mentality of innovating in advance of its clients enables it to "continue to disrupt" the network infrastructure industry.
Citi analyst Jim Suva upgraded ANET from Hold to Buy but maintained his price target of $150. Suva told investors in a research note that while the stock has dropped 17% since the start year, the stock's fundamentals are good, with customer expenditure growing. The analyst sees the company's February 14 earnings report as a favourable driving force and advises investors to buy the stock on the latest pullback. Suva writes in a research note that Arista is "not a cheap value stock," but rather a "top high growth stock."
Keybanc analyst Thomas Blakey commenced coverage on ANET with a Buy rating and a price target of $165. Blakley sees substantial expansion for Arista connected to the possible positive revisions in Enterprise and states that his above consensus projections in the business are likely to be conservative.
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