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Arista Networks Is Trading at a Premium to Analysts’ Estimate

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ANET’s returns

Arista Networks (ANET) was listed back in June 2014. The stock has generated multifold returns since then driven by impressive sales and earnings growth. ANET rose ~38% in 2016 and 134% in 2017. Last year, its stock fell close to 12.5%, and it’s up almost 56% so far in 2019.

ANET shares have generated absolute returns of 395% in the last three years and close to 500% in the last five years. The stocks of peers Cisco (CSCO), Juniper Networks (JNPR), and Hewlett Packard Enterprise (HPE) have generated returns of 32%, 4.4%, and 26.5%, respectively, so far in 2019.

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Analysts’ recommendations

Of the 25 analysts tracking ANET, 16 have given it “buy” recommendations, nine have given it “holds,” and none have given it “sells.” Analysts’ 12-month average price target for ANET is $306.12, and their median estimate is $307. ANET is trading at a premium of 6.3% to analysts’ median estimate.

What do the technical indicators say?

On April 22, ANET closed the trading day at $327.60. Based on that price, the stock was trading as follows:

  • 28% above its 100-day moving average of $255.72
  • 12% above its 50-day moving average of $293.03
  • 3% above its 20-day moving average of $318.51

MACD and RSI

ANET’s 14-day MACD (moving average convergence divergence) is 4.72. A stock’s MACD marks the difference between its short-term and long-term moving averages. ANET’s positive MACD score indicates an upward trading trend.

ANET has a 14-day RSI (relative strength index) score of 68, which shows that its stock is trading very close to overbought territory. An RSI score of above 70 indicates that a stock is overbought, while an RSI score of below 30 indicates that a stock is oversold.

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