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Meanwhile, Arista Networks (ANET) rallied more than 4% to 271.42 in volume running more than 90% above its 50-day average, a bullish sign following Monday’s strong advance in which the data-center networking gear expert punched above the 50-day moving average for the first time since closing below it nearly two weeks ago.
The strong move back above the 50-day line near 259 offers investors with a big profit cushion an opportunity to add a small amount of shares in the hopes of compounding overall return in the investment. However, the recent big drop following its Q4 report represents higher downside risk.
Arista also already has advanced 202% since breaking out of a base at 103.10 on Feb. 17, 2017. Such a huge gain means that the chance of an even deeper new correction is higher.
While Arista and Dow Jones industrials component Cisco Systems (CSCO) continue to lock horns over a tech patent dispute, the former continues to show excellent fundamentals and a positive growth outlook. Plus, continued strength by Arista would perhaps indicate that the two companies will eventually settle.
Arista continues to post improving after-tax margin, a sign of strong pricing power or cost controls, or both. Meanwhile, pretax margin lifted 450 basis points to 34.4% in 2017, the highest in at least seven years.
The Santa Clara, Calif., firm, headed by Jayshree Ullal, a former senior vice president at Cisco who excelled at increasing sales in the data-center market, also gave a solid top-line outlook for the first quarter with a revenue target of $450 million-$468 million, which would be up 34% to 39% vs. a year ago.
Arista’s revenue has grown 35%, 37%, 33%, 34%, 39%, 51%, 51% and 43% vs. year-ago levels in the past eight quarters.