Shares in Arista network (ANET) rose on the forecast for revenue growth in the financial year 2022, when the company also announced a four-to-one share split. The ANET share was expanded on its way into its better-than-expected third-quarter earnings report.
Arista shares rose 24.7% to 509.55 in morning trading on the stock market today. The ANET share is trading well above its 384.10 entry point.
For the September quarter, Arista’s earnings per share 22% year-over-year to $ 2.96, topping the estimates at $ 2.73. Revenue grew 24% to $ 748.7 million, beating forecasts of $ 748 million.
Santa Clara, California-based Arista sells switches that speed up communication between racks of computer servers wrapped in data centers. Arista’s primary customers have been Internet companies.
ANET Stock: Facebook, now called Meta, a big customer
For the financial year 2022, Arista expected revenue growth of 30%, as the data center orders increase from kl. Facebook (FB), now called Meta. Arista, a rival of Cisco systems (CSCO), also expects high demand in the business market.
Needham analyst Alex Henderson said the target of 30% revenue growth is possible. “Part of this upside reflects a 10% price increase that will soon take effect in the fourth quarter, but much of it also reflects an unusually strong supply chain management,” he said in a report.
Arista said it expects $ 400 million in business campus sales next year, an increase of about 100%.
“They raised their image for revenue growth in 2022 to 30% year-over-year, or about $ 3.7 billion in total sales,” Jefferies analyst George Notter said in a note to customers. “It’s a big bump up. Previous consensus views demanded $ 3.23 billion.”
However, ANET equities analysts warned that growth will slow in the financial year 2023 and beyond.
“We expect most of the upside is already priced at current levels and remain concerned that long-term competition from both white box and other suppliers will make its double-digit sales growth difficult to maintain,” Barclays analyst Tim Long said in his note to customers.
Arista announces buyback
In addition, the computer network equipment maker announced a $ 1 billion share buyback program.
The Arista stock has a relative strength rating of 86 out of the best possible 99, according to the IBD Stock Check-up.
“Following Facebook’s plan to increase its investment capital by over 60% next year, it’s clear the wind is in Arista’s back,” said ANET stock analyst Simon Leopold of Raymond James in a note. “Given the competitive environment and the constraints of the supply chain, this forecast seems aggressive.”
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