As you might know, Arista Networks, Inc. (NYSE:ANET) just kicked off its latest quarterly results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 2.4% to hit US$1.7b. Arista Networks reported statutory earnings per share (EPS) US$2.08, which was a notable 15% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Following the latest results, Arista Networks' 25 analysts are now forecasting revenues of US$6.80b in 2024. This would be a reasonable 7.8% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be US$7.97, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$6.72b and earnings per share (EPS) of US$7.60 in 2024. So the consensus seems to have become somewhat more optimistic on Arista Networks' earnings potential following these results.

There's been no major changes to the consensus price target of US$353, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Arista Networks at US$432 per share, while the most bearish prices it at US$220. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Arista Networks' revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2024 being well below the historical 24% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.0% per year. Even after the forecast slowdown in growth, it seems obvious that Arista Networks is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Arista Networks following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$353, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Arista Networks. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Arista Networks analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for Arista Networks that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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