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Here's Why Arista (ANET) is a Promising Portfolio Pick

Shares of Arista Networks, Inc. ANET have risen 37.6% over the past six months, driven by solid demand trends and healthy customer additions. Its current fiscal-year earnings estimates have moved up 23.8% over the past year, while that for the next fiscal year has appreciated 27.1% over the same time frame, implying healthy growth potential. Despite intense market volatility, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Growth Drivers

Arista continues to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. It is well-poised for growth in data-driven cloud networking business with proactive platforms and predictive operations.

The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. It is increasingly gaining market traction in 200- and 400-gig high-performance switching products. It remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.

With customers deploying transformative cloud networking solutions, it has announced several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge. It has introduced cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Google Hangouts, Microsoft Teams and Zoom.

Arista has introduced a network observability software, DANZ Monitoring Fabric (DMF), on its switching platforms for enterprise-wide traffic visibility and contextual insights. The offering enables mission-critical monitoring of enterprise traffic while improving efficiencies and reducing operating expenses through the adoption of modern cloud networking principles. DMF enables IT operators to extensively monitor all user, device and application traffic by gaining complete visibility into physical, virtual and container environments. The DMF offering is based on Arista’s popular switching platforms with optional advanced nodes.

The buyout of Awake Security, a Network Detection and Response platform provider that combines artificial intelligence with human expertise to autonomously hunt and respond to insider and external threats, has strengthened its market position. The company expanded its cognitive campus portfolio with new platforms, including the 750 Series modular chassis and the 720 Series 96 port fixed switch. Arista announced unified edge innovations across wired and wireless networks for its Cognitive Campus Edge portfolio for Enterprise Workspaces. It has also introduced an enterprise-grade Software-as-a-Service offering for the flagship CloudVision platform.

Arista continues benefiting from the expanding cloud networking market, driven by strong demand for scalable infrastructure. In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance and programmability, enabling integration with third-party applications for network management, automation and orchestration. It offers one of the broadest product lines of datacenter and campus Ethernet switches and routers in the industry. Arista provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency. The company also innovates in areas such as deep packet buffers, embedded optics and reversible cooling.

The stock delivered an earnings surprise of 12.7%, on average, in the trailing four quarters. With a long-term earnings growth expectation of 17.5%, this stock appears to be an enticing investment option for the volatile market.

Other Key Picks

TESSCO Technologies Incorporated TESS, sporting a Zacks Rank #1, delivered an earnings surprise of 126.1%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 44.3% since November 2021.

TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.

Harmonic Inc. HLIT, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 48.6% since March 2021.

Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.

AudioCodes Ltd. AUDC, sporting a Zacks Rank #1, is likely to benefit from the secular tailwinds related to IP-based communications. Incorporated in 1992 and headquartered in Lod, Israel, it offers advanced communications software, products and productivity solutions for the digital workplace. It has a long-term earnings growth expectation of 9%.

AudioCodes It aims to leverage its long-term partnership with Microsoft to further strengthen its market position. It is also likely to benefit from its continued focus on high-margin businesses.

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Harmonic Inc. (HLIT) : Free Stock Analysis Report

AudioCodes Ltd. (AUDC) : Free Stock Analysis Report

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Arista Networks, Inc. (ANET) : Free Stock Analysis Report

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