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The Zacks Analyst Blog Highlights: Arista, Microsoft, Alphabet and Zoom Video

Zacks Equity Research
·5 min read

For Immediate Release

Chicago, IL – October 26, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Arista Networks, Inc. ANET, Microsoft Corporation MSFT, Alphabet Inc. GOOGL and Zoom Video Communications, Inc. ZM.

Here are highlights from Friday’s Analyst Blog:

Arista Boosts Threat Detection with Awake Security Buyout

In a concerted effort to boost threat detection capabilities across the cloud network traffic, Arista Networks, Inc. has inked a definitive agreement to acquire Awake Security for an undisclosed amount. The transaction is expected to be completed by the fourth quarter, subject to mandatory closing conditions and regulatory approvals. The deal is not likely to have any material impact on Arista’s fiscal 2020 operating results.

Founded in 2014, Awake Security is a network detection and response platform provider that combines AI with human expertise to identify and respond to insider and external threats. Its disruptive security and AI-driven business model offers proactive threat detection with actionable insights that are radically different from traditional security solutions. This, in turn, helps to better address the evolving nature of data theft risks and develop a cognitive platform that safeguards day-to-day security operations from malicious intents.

The buyout is likely to add significant value to Arista and complement many of its Endpoint Detection Response (EDR) offerings. The transaction brings together two leading technology firms with complete situational awareness of customers’ digital assets along with the ability to fully assess and respond to critical threats. In addition to distinct synergies in technology and market opportunity, the deal is based on commonalities in values, culture and philosophies, and is likely to deliver secure cloud networking experience for clients.

Moving forward, Arista is likely to benefit from the expanding cloud networking market owing to strong demand for scalable infrastructure. In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance along with programmability that enables integration with third-party applications for network management, automation and orchestration.

Notably, Arista has extended its leadership in open cloud networking software, while partnering with Microsoft Corporation for open networking for SONIC. It has also introduced new cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Alphabet Inc.’s Google Hangouts, Microsoft Teams and Zoom Video Communications, Inc.

In addition, Arista is well poised to benefit from strong demand for its data center switches. Moreover, continued spending on IT infrastructure products (server, enterprise storage and Ethernet switches) for deployment in cloud environments is likely to benefit the company. Its switches and routers support the high-end cloud networking market that require fast throughput at low cost. The robust product portfolio is aiding the company to win customers on a regular basis.

However, the company expects near-term volatility to continue due to the coronavirus-led disruptions despite the underlying strength of the resilient business model and diligent execution of operational strategies. The company expects the remainder of 2020 to be quite turbulent, with a pause in cloud titan set of orders leading to muted growth compared with the previous years. Markedly, Arista has experienced annual revenue growth rates of 12.1%, 30.7% and 45.8% in 2019, 2018 and 2017, respectively.

The company is likely to tide over the short-term headwinds through healthy inorganic growth post the completion of the deal and integration.

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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.


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