Barclays Raises Price Target On Arista Networks From $125 To $148

Barclays’ Mark Moskowitz believes the “Big Three” levers for Arista Networks Inc ANET that could drive sustained above-peer growth for several years are being realized with the company’s partnership with Hewlett Packard Enterprise Co HPE.

The analyst maintained an Overweight rating on Arista Networks, while raising the price target from $125 to $148.

The HPE Partnership

Moskowitz mentioned that the company was leveraging its partnership with Hewlett Packard Enterprise “for greater telco service provider exposure,” while having gained data center switching share more rapidly than expected.

At the Mobile World Congress in Barcelona, Moskowitz met with Hewlett Packard Enterprise’s SVP/GM Data Center Infrastructure Group, Alain Andreoli, who “continued to advocate for the strategic importance of the Arista relationship.”

The analyst went on to say that conversations with industry participants suggest “there is real muscle behind this budding partnership.”

Moskowitz believes these indications to be “signposts” of significant revenue generation in 2017.

Related Link: Arista Introduces Containerized Software for Cloud Networking

Growing Market Share

In addition, according to the Dell’Oro data, Arista Networks increased its share of the data center switching market from 9 percent in the September quarter to 9.5 percent in the December quarter.

“These share gains likely are the result of customer acquisitions and growing revenue per customer,” the analyst pointed out.

Moskowitz believes these gains are sustainable and underpin the 2020 data center switching market share estimate of 16.5 percent.

“We still believe the major thrust of Arista's move into routing is 2-3 years away, but we are encouraged that Arista announced ~50 routing customers during its last earnings call,” the analyst added.

Moskowitz believes this is of particular significance due to Arista Networks’ high average revenue per customer.