Arista Networks Inc. (ANET) is bringing networking into the age of the Cloud, which can bring huge efficiency and scale benefits to legacy networking environments, asserts Jim Kelleher, analyst with Argus Research.
Arista Networks is a leading supplier of cloud networking solutions for internet companies, cloud service providers, and next-generation data centers. It generates the largest portion of its revenue from switching products that incorporate its Extensible Operating System (EOS) software.
While ANET currently mainly works with enterprise customers, there is a large barely tapped potential with service providers, ISPs, and cloud titans.
Arista has experienced 'unforeseen demand' for initial 100-gig routing and switching deployments. This has kept Arista's annual growth in the 50% range, compared with 20%-30% for other cloud-sensitive vendors.
The company is also experiencing continued sharp growth in overseas markets that are behind in cloud deployments, while also benefiting from its multi-vertical approach spanning cloud SP, carrier and enterprise networks.
We believe the company, which is battling Cisco Systems on multiple patent infringement allegations, is navigating this challenge well with a combination of workarounds, on-shore manufacturing and legal wins.
Arista is in the habit of not just beating but smashing expectations, as the company's next-generation solutions appeal to a fast-growing customer base. Revenue and EPS have been growing faster than share price and we believe the shares are attractively valued.
