Arista Networks (ANET): CPB Ruling Implies Margin Upside - Stifel
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Stifel analyst, Aaron Rakers, reiterated his Buy rating on shares of Arista Networks (NYSE: ANET) Arista (ANET: $87.98) after the company reported that on 11/18 it received a letter from the United States Customs and Boarder Protections (CBP) ruling that the company’s current products, which include the redesigned Extensible Operating System (EOS; 4.16 or later), are not within the scope of the limited exclusion order issued by the U.S. ITC in the '944 Investigation and may be imported into the U.S.
The CBP has issued instructions to the U.S. ports to permit entry of Arista’s redesigned product for sale in the U.S. As a reminder, Arista had previously made certain changes to its manufacturing, importation and shipping workflows to comply with the U.S. ITC’s remedial orders, which included shifting manufacturing and integration of its products to be sold in the U.S. to U.S. facilities.
The analyst believes this is a positive announcement as it allows Arista to import redesigned products into the U.S. The December quarter represents the first full quarter of manufacturing from its U.S. facility, in which Arista expected GM% would be in the middle of its 60%-65% target as it ships a majority of products from its U.S. facility and continued to leverage its Asian supply chain. Arista had noted that over time if it was unable to import components and became more reliant on its U.S. supply chain, GM% could reach the low-end of its targeted range.
No change to the price target of $102.
Shares of Arista Networks closed at $87.98 yesterday.
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