Analyst Note| Mark Cash |
We are maintaining our $105 fair value estimate for narrow-moat Arista Networks after its first-quarter results exceeded our expectations for revenue growth and adjusted earnings. Shares were flat after Arista reported, which we attribute to a strong second-quarter growth target being offset by supply chain and increased costs concerns. We view shares as slightly overvalued due to being cautious regarding Arista's ability to durably migrate less sophisticated customers to its solutions against incumbents with deep rooted channel presences. Nonetheless, we still expect Arista to be a top vendor for networking needs in leading-edge data center operations and for its solutions to remain mission critical for sizable operators.