Oppenheimer Upgrades Arista Networks; Calls Cisco 'A Distraction, Not Disruption'

• In a report issued Monday, Oppenheimer analysts Ittai Kidron, Michael Leonard and George Iwanyc upgraded their rating on shares of Arista Networks Inc (NYSE: ANET) from Perform to Outperform.
• The experts also set a $90 price target on the stock, which implies an upside of more than 16 percent.
• The firm argued that the company’s IP litigation with Cisco Systems, Inc. (NASDAQ: CSCO) was more of a distraction than a disruption.

Analysts at Oppenheimer upgraded shares of Arista Networks from Perform to Outperform on Monday, setting a price target of $90.

For quite some time now, the experts have had a positive opinion on the company’s outlook and execution. However, the report noted, potential for an unfavorable result in its IP litigation with Cisco had kept the analysts cautious.

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After “detailed work and discussion with experts,” the experts are convinced that, although Cisco will probably win in some of its patent claims, “it will not disrupt Arista's business.”

In fact, they pointed out that they see share pullbacks related to the issue as a buying opportunity. Fundamentally, they conceive cloud is more of an opportunity than a risk and see “TAM expansion into routing with Jericho.”

“Given Arista's solid execution, we're confident in its ability to capitalize on the upcoming opportunities and to successfully navigate through the legal minefield ahead,” the research note concluded.

Despite the upgrade, shares of Arista Networks were trading slightly down on Monday.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

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