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Arista Networks Faces Margin Pressure Despite Revenue Growth Arista Networks ( NYSE:ANET ), a prominent player in cloud networking solutions, recently reported its fourth-quarter earnings, surpassing profit expectations but issuing a lukewarm forecast for the upcoming quarter. Despite strong revenue growth driven by robust demand from tech giants like Microsoft and Meta Platforms, Arista's ( NYSE:ANET ) shares took a hit in after-hours trading as investors reacted unfavorably to the company's projected lower adjusted gross margin for the first quarter. Let's delve deeper into the factors behind Arista's mixed performance and what it means for investors. Arista's Quarterly Performance: In the fourth quarter of the fiscal year ending December 31st, Arista ( NYSE:ANET ) witnessed a notable uptick in revenue, with a 20.8% year-over-year increase, reaching $1.54 billion. This figure surpassed analysts' average estimates, demonstrating the company's ability to capitalize on the sustained demand for its networking solutions amid the ongoing expansion of cloud infrastructure. Additionally, Arista ( NYSE:ANET ) outperformed earnings expectations on an adjusted basis, reporting a profit of $2.08 per share compared to estimates of $1.70. Margin Pressure and Operating Costs: However, despite the revenue growth and profit beat, Arista's outlook for the first quarter fell short of market expectations, primarily due to concerns over its adjusted gross margin. The company forecasted a margin of about 62%, below analysts' consensus of 62.7%, indicating a potential squeeze on profitability. This margin pressure can be attributed to higher operating costs incurred by Arista ( NYSE:ANET ) as it focuses on expanding its operations and investing in future growth initiatives. In the fourth quarter alone, the company's operating expenses widened to $359.3 million from $299.7 million a year earlier, reflecting the challenges of balancing growth with profitability. Industry Landscape and Peer Performance: Arista's margin woes echo broader trends within the networking sector. Peer company Juniper Networks recently reported downbeat revenue, citing lower client spending on cloud computing and network security services. This highlights the competitive pressures and evolving dynamics within the industry, as companies strive to adapt to changing market conditions and customer demands. While Arista ( NYSE:ANET ) continues to benefit from strong demand from key clients like Microsoft and Meta Platforms, it faces intensified competition and margin compression as it navigates the evolving landscape. Investor Sentiment and Market Reaction: The market's reaction to Arista's earnings reflects investors' concerns over the company's margin outlook. Despite exceeding profit expectations, Arista's shares dipped around 6% in extended trading following the earnings release. Investors appear to be cautious about the company's ability to sustain its growth momentum while maintaining healthy margins, particularly in the face of rising operating costs and competitive pressures. Michael Ashley Schulman, chief investment officer at Running Point Capital, noted that while the profit beat was positive, it may not be sufficient to drive shares higher given the lower gross margin projection for the upcoming quarter. Looking Ahead: As Arista ( NYSE:ANET ) navigates the challenges of margin pressure and heightened competition, investors will closely monitor its strategic initiatives and execution capabilities. The company's ability to effectively manage operating costs, drive efficiency improvements, and capitalize on growth opportunities will be key determinants of its long-term success. Additionally, developments in the broader networking industry, including technological advancements and shifts in customer preferences, will shape Arista's trajectory moving forward. Despite near-term headwinds, Arista's ( NYSE:ANET ) strong revenue performance underscores its resilience and potential for sustained growth in the dynamic landscape of cloud networking solutions. Conclusion: Arista Networks' ( NYSE:ANET ) recent earnings report highlights the company's ability to deliver solid revenue growth and exceed profit expectations, driven by resilient demand for its networking gear. However, concerns over margin pressure and heightened operating costs have dampened investor sentiment, leading to a decline in share prices. As Arista ( NYSE:ANET ) navigates these challenges and positions itself for future growth, investors will scrutinize its ability to maintain profitability while capitalizing on opportunities in the evolving networking industry.
NYSE:ANET
by DEXWireNews
Further Long entry into or after earnings BreakoutAs we approach the all time highs on Arista Networks, technically the price has been in the range of upside since 2023, and looks gain more traction as we approach a key moment for the future of ANET. This sector, electronic tech sector should continue to gain traction so long as the markets sentiment around tech stocks, semiconductor equities continue to rise. The volume has been increasing and the sentiment around this company has been quite strong in recent months. The technical are aligning as we observe the two charts below daily to the left and weekly to the right. Price is in a clear uptrend no doubt, although of the last 6/9 days have been bullish the 3 days being bearish, the most recent long wick/shadows or big bodied candled has provided an increase runway leading into earnings. The momentum based on the moving average convergence divergence (in purple) is quite strong and there is a quite a gap between the signal line and macd line. The histograms overshadows the previous bearish bars. JUST be aware we are reaching OVERBOUGHT region in regards to price action but if buyers continue to step in and risk on continued success from ANET this could be a good opportunity to go long or you could set up put options against this analysis.
NYSE:ANETLong
by b58-nic0
ANET: Price Psychology, Fundamentals & Price ProjectionFundamentals : ANET is lacking in one important parameter in my checklist; that is, sales acceleration. Three year earnings growth rate is strong. A growing number of funds are adding this stock to there portfolios. It is not the best stock that I would like to own fundamentally, but it is a good stock to invest in. So, I will gradually add to it in smaller portions than normal until the fundamentals are no longer in favor. Note: Earnings are coming out on Monday October 26, 2023. Technicals : ANET loves weekly 61.8% pullbacks since the beginning of its uptrend in March 2020 and since its inception around 2016. A new weekly 61.8% pullback Weekly HHHL with good volume a-b-c equal legs completion + 3 bearish weeks down in an uptrend uHd developing horizonal+kijun support nearby extreme indicator on the daily chart (not shown) Price Projection : If this is the bottom or near the bottom of the retracement in ANET's price, then the stock will reach 200 to 250 by December 2023 to January 2024, according to Fibonacci time projection analysis. Final Assessment: Stock correction is an opportunity to buy on a weekly dip as weak holders get flushed. Mid-term to long-term buyers will accumulate the stock.
NYSE:ANETLong
by Rocketman
2
ANET Minor Low BuyANET is in a strong trend and is potentially pulling back to price based support levels. Prices have broken down from a bearish flag that formed after earnings. However, the price based pullbacks are supported by volume. Two levels appear to be in play. 1. $213.16 2. $210.16 I will look for prices to hit these levels and then buy on the minor low breakout. Title Minor Low Buy Trade Theme Daily Sector/Stock ANET Trend G/G Propulsion Yes Vscore Almost - needs pullback Vprofile Yes RAF Extreme Darvas No Darvas 3.0 No Entry Waiting for pullback Profit/Breakeven Waiting for pullback Stop Loss Waiting for pullback Option Option Play
NYSE:ANETLong
by TradingBandito06
$ANET: Arista looks 'excellent' indeedJust as the greek word, the chart here looks excellent...There's both a daily and a monthly uptrend signal active, which gives this stock tremendous reward to risk potential long term. I am not a huge fan of the valuation, so I was skeptical to get involved but perhaps I am missing something regarding fundamental catalysts for the stock going forward, perhaps related to the boost to demand for their products from the AI large language model war. Companies might scramble to get the required infrastructure to run their algorithms on? Chart wise, the setup is perfect and predicts a steady trend if price stays above $119 where the monthly trend would be invalidated. The daily predicts immediate upside within the next 10 business days. Best of luck! Cheers, Ivan Labrie.
NYSE:ANETLong
by IvanLabrie
Arista Networks Could Be Fighting HigherOnly six members of the S&P 500 hit new 52-week highs last Thursday. (It was the fewest since March 17, according to TradeStation data.) Let’s consider Arista Networks, one of that small handful of names. The first pattern on today’s chart is the bullish gap on August 1 after quarterly results beat estimates. ANET not only held those gains as the broader market fell this month. It’s also made higher weekly lows. That may suggest that a new uptrend is taking shape. Next, the tech company jumped to new highs on August 24 after Nvidia spurred optimism toward artificial intelligence (AI). It was swept lower along with most stocks, but it’s now trying to stabilize near the previous peak from May 30. Is old resistance becoming new support? Prices have additionally tested the 21-day exponential growth moving average (EMA) -- a potential trend indicator. If ANET manages to hold this price zone through the volatile Labor Day period, traders may look for more upside into September. TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more. Important Information TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means. This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates. Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com .
NYSE:ANET
by TradeStation
ANET: Ascending Triangle, Not confirmed (35,79%)(2/1000)(2/1000) Ascending Triangle for ANET. Not Confirmed yet. Pros: 1- Bullish Ascending triangle 2- Descending volume during formation of the triangle (last half) 3- PPS above 50MA and 200MA 4- RS above 0 and ascending 5- R/R ratio above 5 6- 250RSI above 50 and ascending 7- 50MA above 200MA 8- 50 MA flat but 200MA ascending. Cons: 1- ATR is descending/flat, less volatile 2- Triangle not confirmed yet Target price is 232,05$. Again, stay humble, have fun, make money! MAAX!
NYSE:ANETLong
by LeLaf
ANET Entry, Volume, Target, StopEntry: when price clears 178.36 Volume: with daily volume greater than 6.35M Target: 206 area Stop: Depending on your risk tolerance; 169.17 gets you 3/1 Risk/Reward. This swing trade idea is not trade advice and is strictly based on my ideas and technical analysis. No due diligence or fundamental analysis was performed while evaluating this trade idea. Do not take this trade based on my idea, do not follow anyone blindly, do your own analysis and due diligence. I am not a professional trader.
NYSE:ANETLong
by tradepatiently
4
ANET - Entry, Volume, Target, StopEnter when price clears 171.44 With daily volume greater than 3M Target: 214 area Depending on your risk tolerance: 157.23 gets you 3/1 Risk/Reward but it's over 8%, I would consider a stop below the low of the candle before the break above 171.44, or something near that. This trade idea is not trade advice. This idea is strictly based on my ideas and technical analysis. Not due diligence or fundamental analysis was performed while evaluating this trade idea. Do not take this trade based on my idea, do not follow anyone blindly, do your own analysis and due diligence. I am not a professional trader.
NYSE:ANETLong
by tradepatiently
4
ANET , LONG Bought the bull flag on ANET / wedge pop Earnings is monday AMC but so I am literally giving it a monday to hopefully move enough to hold a bit . 1.5 R gives me 1/4 carryover, 1R gives me a 1/6 , anything under that is just going to be sold . I have done the math on this and it allows for a 4 R gap down unscathed ... if earnings reaction bad ... In my opinion 1.5 R , sell 3/4 , hold 1/4 is the best , holding 1/4 your balance still needs to go 4X 1R to equal 1R , so I sort of feel like its feels like a good bare minimum threshold level to carry over a responsible amount whereas 1R could work but then your balance needs to move 6R to equal 1R . For me , personally , I think that I will gravitate to 1.5R sell 3/4 , hold 1/4 , as a more typical procedure but still figuring it out .... Time for a hike for me now , have a good weekend ~ QQQ note : Maybe next week we might actually break up too , back in the trading range breakout mode on QQQ again for now . So far with this multi week range , Al brook 80 % rule has really been spot on , that being that 80 % of the time trading range breakouts fail to have follow-through looks like we might close at the top again today , which would mark the third attempt at a breakout , none of the breakouts up or down have worked so far ... will this one be the 20% or the 80% , guess its better to expect the 80% but man would it be nice to get the 20 %
NYSE:ANETLong
by NAK1987
4
ANET - LONGRecent TT's breakout that also has some pretty darn impressive earnings and sales to accompany ... Brought in after-hours ... Market and General Notes Comeback day for market from what many bears probably saw as a short QQQ setup per yesterdays close but 80% rule ( 80 percent odds of failed breakout and range resumption ) . In turn bulls pushed QQQ up and over the range but now once again odds favor range resumption , would love to see the 20 % chance that we follow-through on todays move though and push up and away from the 6 day range ... to date . If tomorrow bulls can push and get us out of this range that would be nice :) Was stopped on SMH today and semis showed weakness vs QQQ , not ideal , but unless it breaks key levels trying to focus on that and MCHI as ETF names I'd like to play . ELF/LW/XLC all performing well . IG net short positioning remains crazy high France 40 Hits 90% net short .WOW Dow jones 72% net short SPY 64% Then per futures positioning commitments Dealer positioning is net long and lots of leveraged money to the short side . I will bet on the dealers money ~
NYSE:ANETLong
by NAK1987