Arista Networks (NYSE:ANET) Stock Gains 14% Over Last Quarter

Arista Networks (NYSE:ANET) reportedly in talks to acquire VeloCloud Networks, a significant acquisition to bolster its presence in the SD-WAN technology space, coincides with a 14% rise in its stock price last quarter. Additionally, the company's strong Q1 earnings, with a 28% revenue increase to $2 billion and a new $1.5 billion share repurchase program, likely added momentum to its share performance. These corporate actions aligned with a robust broader market, driven by solid economic indicators and easing of tariff concerns, depicting favorable conditions for Arista amidst wider sector gains.

You should learn about the 1 possible red flag we've spotted with Arista Networks.

Uncover 18 companies that survived and thrived after COVID and have the right ingredients to survive Trump's tariffs.

The potential acquisition of VeloCloud Networks could significantly impact Arista Networks’ positioning in the SD-WAN technology space, aligning with their existing focus on AI and cloud-driven growth. This move may further bolster Arista’s revenue forecasts, potentially driving sustained demand for its advanced networking solutions. Arista's share repurchase program can provide additional support to the share price, enhancing shareholder value in alignment with the company’s growth ambitions.

Arista Networks has demonstrated a very large total return of 596.01% over the past five years, reflecting strong performance. However, when analyzing more recent data, its total return for the past year underperformed the broader US Communications industry, which saw considerable gains. Nevertheless, Arista continues to be viewed positively given its long-term track record.

With the share price now at US$94.5, the acquisition and expansion efforts help contextualize the price movement relative to the more bullish analyst price target of US$130.0, a sizable 27.3% higher than the current share price. Revenue growth driven by increased market penetration in AI data centers may support a positive outlook, but certain risks remain, as analysts predict a slight decline in profit margins over the coming years.

Explore historical data to track Arista Networks' performance over time in our past results report.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com