Why Arista Networks Stock Is Soaring Today
Key Points
Arista Networks beat Wall Street's Q4 sales and earnings targets and issued strong guidance.
The stock is also getting a boost from the latest CPI inflation numbers.
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Arista Networks (NYSE: ANET) stock is making big gains in Friday's trading. The networking-technology company's share price was up 5.4% as of 3 p.m. and had been up by as much as 10.1% earlier in trading.
Arista Networks' valuation is moving higher thanks to the company's strong fourth-quarter report. The stock is also getting a boost from the latest round of inflation data.
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Arista surges on strong Q4 print
Arista Networks published its fourth-quarter results after the market closed yesterday and reported sales and earnings that came in above Wall Street's forecasts. The business posted non-GAAP (adjusted) earnings per share of $0.82 on revenue of $2.49 billion, beating the average analyst estimate's calls for per-share earnings of $0.76 and sales of $2.39 billion. Arista has continued to benefit from artificial intelligence (AI) infrastructure buildouts, and the company issued encouraging forward guidance in conjunction with its Q4 report.
For the current quarter, Arista is targeting revenue of roughly $2.6 billion -- topping Wall Street's previous forecast for sales of $2.46 billion. Management also guided for an adjusted gross margin between 62% and 63% and an adjusted operating margin of roughly 46%.
Today's inflation report is also lifting Arista stock
The Bureau of Labor Statistics published consumer-price-index (CPI) data for January this morning, and the numbers looked good for Arista and other growth stocks. January CPI inflation came in at 2.4% -- below the 2.5% level forecasted by economists. Lower inflation increases the likelihood that the Federal Reserve will cut interest rates, which would likely be a bullish development for the stock market and growth stocks in particular.
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Keith Noonan 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.
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