Positive analyst opinions often determine stock trading decisions, and they can serve as a guiding light for trading and investing.
Arista and Equinix Are Doing Well
Arista Networks ($ANET) along with Equinix ($EQIX) were boosted the previous week after a positive research note from Berenberg analysts. The analysts have a bullish outlook on these cloud datacenter stocks and expect them to exceed their market and dominate the cloud datacenter market. One of the analysts, JosepBori, has given a buy recommendation and initiated coverage on these stocks. He issued a price target of $225 on shares of Arista.
Market Analyst Has Great Expectations for Arista
Based in San Jose, California, Arista is a competitor to Cisco ($CSCO) in the networking field though ironically it was founded by former Cisco employees. Bori considers Arista to be "an emerging leader" having a competitive edge since it has focused pretty early on its EOS operating system. He points out that the founders were able to think ahead of their times back in 2004 regarding the greater expectations that would be placed on cloud and enterprise datacenters with respect to performance, programmability, automation, resilience and pricing.
Bori pointed out that Arista has committed to creating a hardware-agnostic platform right from its inception. That has given it the technical edge, and its products have been proved by their greatest suitability to networking cloud computing models.
Astronomic Rise in Revenue for Arista
Arista's revenues have risen 43% in 2015, and a year later they rose again by 35%. The momentum of success and growth could continue further as the customers' business model of networking experiences a transition from buying hardware to signing up for software subscriptions. With advanced cloud technology, the need for stacking up physical equipment has been significantly reduced.
Competitive Pressure Exerted on Arista
Bori has an overall bullish perspective on $ANET but does accept the risks the company could have to face too, particularly the competitive pressure that would be thrown at it from some software-only networking providers such as Big Switch, Pica8 and Cumulus Networks.
Another threat is that some of Arista's greatest cloud customers are making efforts to build networking software by themselves. A prime example is Microsoft ($MSFT). That means it needs to build up its customer base by bringing in new businesses if some of its existing customers decide to get their own networking software and infrastructure. Arista is up 92.9% year-to-date (YTD), while the S&P 500 only experienced a rally of 11.7% in the same period.
Equinix Is Expanding to Europe
Equinix is up 23% YTD. Redwood City, California-based Equinix is doing well too and has opened its latest advanced data center in Silicon Valley. With its recent 259 million US dollars acquisition of Itconic, a leading cloud infrastructure provider and data center operating in Spain and Portugal, and its subsidiary CloudMas, Equinix gains an entry into the European market as well. The acquisition will close in Q4, 2017.
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