Arista Posts Robust Growth in Q2 Despite Persistent Supply Chain Constraints; Raising FVE to $115

We are increasing our fair value estimate for narrow-moat Arista Networks to $115 per share from $105 after its second-quarter results surpassed our expectations for revenue growth and earnings. Our increase is rooted in stronger near-term growth and expansion within larger enterprise customers. We view Arista’s shares, which gained over 6% in after hours trading to $126, as slightly overvalued. Despite supply chain constraints and increased component costs, Arista saw strong demand across all areas of its business, temporarily allaying concerns of IT spending lulls from the current networking demand environment.