Long Trade Idea
Enter your long position between $129.24 (yesterday’s intra-day low) and $133.34 (an intermediate horizontal resistance level).
Market Index Analysis
- Arista Networks (ANET) is a member of the S&P 500 Index.
- This index trades in a bearish chart pattern with rising bearish trading volumes.
- The Bull Bear Power Indicator of the S&P 500 is bearish with a descending trendline.
Market Sentiment Analysis
Equity markets extended their slide amid heavy selling in software stocks and a general rotation out of tech. AMD shares plunged despite delivering better-than-expected results, but the outlook disappointed. Alphabet reported solid earnings and massive capital expenditures, transforming itself from an AI laggard to an AI leader. Qualcomm shares tumbled after the company issued a weak outlook. The ADP employment report delivered another worse-than-expected reading on the labor market. Amazon’s earnings are in focus today and could set the tone for markets.
Arista Networks Fundamental Analysis
Arista Networks is a computer networking company that designs and sells multilayer network switches. It delivers software-defined networking (SDN) for data centers, cloud computing, high-performance computing, and high-frequency trading environments.
So, why am I bullish on ANET ahead of its earnings release?
Arista Networks is uniquely positioned to benefit the most from this year’s AI infrastructure build-out with its next-generation R4 Series switches, its ability to deliver the 800G and 1.6T Ethernet upgrades, and its leadership in the Ultra Ethernet Consortium. ANET should deliver 20%+ revenue growth, margin improvements, and a healthy outlook. I am equally bullish on its strategic partnerships and acquisitions, including Meta’s Disaggregated Scheduled Fabric (DSF), campus networking with VESPA, and the acquisition of VeloCloud.
Metric | Value | Verdict |
P/E Ratio | 52.96 | Bearish |
P/B Ratio | 14.74 | Bearish |
PEG Ratio | 2.07 | Bullish |
Current Ratio | 3.25 | Bullish |
ROIC-WACC Ratio | Positive | Bullish |
The price-to-earnings (P/E) ratio of 52.96 makes ANET an expensive stock. By comparison, the P/E ratio for the NASDAQ 100 is 34.20.
The average analyst target for ANET is $164.99. This suggests good upside potential with acceptable downside risks.
Arista Networks Technical Analysis
Today’s ANET Signal
- The ANET D1 chart shows a price action inside a bullish price channel.
- It also shows price action between its ascending 50.0% and 61.8% Fibonacci Retracement Fan levels.
- The Bull Bear Power Indicator turned bearish but remains above its ascending trendline.
- The average bearish trading volumes are higher than the average bullish trading volumes but suggest a bearish washout.
- ANET corrected with the NASDAQ 100 Index, a bearish confirmation, but bullish catalysts are dominating the narrative.
My ANET Long Stock Trade
- ANET Entry Level: Between $129.24 and $133.34
- ANET Take Profit: Between $164.99 and $169.94
- ANET Stop Loss: Between $111.61 and $114.52
- Risk/Reward Ratio: 2.03
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