We value ANET at $176, or a ~43x P/E based on our FY27 EPS estimate. Our target multiple is at a discount to current valuation but at a premium to the stock's 3-year median valuation, reflecting rising market multiples, the company's growing share of the AI market, and the sustainable growth the company sees in both AI and Campus.
|
Downside risks to our target price include: 1) weaker sales due to lower spend by, or the loss of, one of Arista’s two top cloud customers; 2) share losses from competition data center switch vendors; 3) lower gross margins due to protracted supply chain disruptions and elevated logistics costs; and 4) a slower economic environment.
|