How AT&T Makes Arista Networks An Interesting Investment

Cowen’s Paul Silverstein maintained an Outperform rating for Arista Networks Inc ANET, with a price target of $76. Check had indicated that the company would be among the beneficiaries of planned efforts by AT&T Inc. T to push its Data Center architecture deeper into its Central Offices.

“Our most recent checks indicate that Arista Networks continues to make progress at AT&T in addressing an MPLS Wide Area Networking use case, which would expand Arista Network’s TAM beyond the data center,” analyst Paul Silverstein wrote. Checks suggested that AT&T intends to deploy Arista Networks for this MPLS L2 switch application.

In case AT&T proceeds with the deployment, it could begin ramping up late in 2016 or in early 2017, and the revenue opportunity could potentially exceed $100 million per year over an estimated deployment period of 12-18 months, Silverstein said.

Other Benefits

Arista Networks is also poised to benefit from the latest developments in silicon-photonics as well as Microsoft’s plans to “commence deploying QSFP28 100G pluggable transceivers with 40 - 80 km reach directly in switches for interconnecting its data centers within that distance,” the Cowen report stated.

Silverstein believes Microsoft’s plans would drive incremental demand for Arista Networks’ solutions.