© Reuters. 2024 networking spend concerns prompt Arista Networks (ANET) downgrade at Piper Sandler
Piper Sandler analysts downgraded shares of Arista Networks (NYSE:) to Neutral, maintaining a $190 price target on the stock in a note Wednesday.
The analysts described the stock as a “secular winner in a cyclical space” but noted that the cycle is down.
“We are downgrading shares of ANET from OW to Neutral primarily due to our concerns around 2024 networking spend (both from a cloud + enterprise perspective), and valuation reflecting a more balanced risk-reward profile at these levels,” the analysts wrote.
Despite the downgrade, the firm sees fundamental upside into Q3 and still views Arista as that secular winner, stating it has the “best relative exposure across verticals, networking markets, customers, and largest AI potential given the high-end Ethernet share.”
“However, with the stock already trading at +1 standard deviation above the historical average and nearing ‘peak’ multiples, we believe the stock is already embedding the goal of ‘double-digit’ growth in 2024, despite cloud digestion, limited visibility, and enterprise budget concerns,” the analysts said.
They added that the firm could be more constructive on the stock following a reset in 2023.
Read the full article here
