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Why Shares of Arista Networks Are Skyrocketing This Week
Key Points
In addition to upgrading Arista stock, an analyst boosted his price target earlier this week.
The analyst believes Arista can achieve year-over-year sales growth of 40% over the next two years.
After climbing 4.9% last week, Arista Networks (NYSE: ANET) shares have continued to rise over the past few days. Shares soared earlier this week after investors learned of an analyst's increasingly bullish outlook on the edge computing stock, and the buying frenzy has shown no signs of slowing.
According to data provided by S&P Global Market Intelligence, shares of Arista are up 15.7% from the end of trading last Friday through the close of Thursday's market session.
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More than one factor has an analyst seeing greater upside to Arista stock
Upgrading it to buy from hold, Mike Genovese, a Rosenblatt analyst, raised his price target on Arista stock Tuesday to $180 from $165. Based on Arista's closing price of $126.25 on Monday, Genovese's price target implies upside of almost 43%.
According to Thefly.com, Genovese based his increasing optimism for Arista stock on growing confidence that the company's newly announced XPO module will be a success. The XPO liquid-cooled optics module is specifically designed for artificial intelligence (AI) networking.
Moreover, with the company securing key partnerships with Anthropic and Alphabet's Google, Genovese believes that Arista could grow year-over-year revenue 40% in 2026 and 2027.
Shares are trading at a premium, but that doesn't make them undesirable
Trading at 53.1 times trailing earnings, shares of Arista are changing hands at a premium to their five-year average P/E of 41.2. With the steeper valuation, some might be inclined to dismiss the stock as a potential buy, but that would be unwise. One of the leading edge computing stocks available to investors, Arista is a great consideration for those seeking a stalwart tech stock.
Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Arista Networks. The Motley Fool has a disclosure policy.