Technology
Despite Horrible Sentiment, Top Networking Stocks Could Have Big 2016
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It doesn’t take a market genius to figure out that the information technology (IT) and networking sentiment is horrible. Just look at the daily drubbing the technology sector continues to take. Also look at the late to the party bears, who apparently now see nothing but doom and gloom.
The bottom line is that while sentiment is weak, Web 2.0 and cloud IT demand remains very strong, and in a new research report, Deutsche Bank thinks that the exponential growth in the 100G data center switching refresh could prove to be a $1 billion opportunity this year, and top companies in the firm’s coverage universe stand to benefit.
Four stocks are rated Buy at Deutsche Bank, and all could benefit from the spending onslaught.
Arista Networks
This company went public in the summer of 2014 and has continued to be one of the hot tech stories. Arista Networks Inc. (NYSE: ANET) delivers software-driven cloud networking solutions for large data center and computing environments. In addition, its 10/40/100 gigabit Ethernet switches offer scalability and performance, and they have over 2,700 customers and more than 2 million cloud networking ports deployed worldwide. At the core of Arista’s platform is EOS, an advanced network operating system. Arista Networks products are available worldwide through distribution partners, systems integrators and resellers.
Many on Wall Street think that the company could benefit from dual supplier requirements at the Web 2.0 and cloud portals, and they think Arista could see upside to the lofty 30% compound annual growth rates currently forecast. Some also see the stock benefiting as networking vendor that is leveraged to data center deployments.
The patent lawsuit filed by Cisco was seen as just a minor loss to the company when some of the rulings came out recently. International Trade Commission Administrative Law Judge David Shaw said Arista violated Section 337 of the Tariff Act 17 times, but declined to cite 15 other claims of violations that Cisco brought against Arista. Many on Wall Street expected Arista to engineer “workarounds” by the time the decisions are finalized.
The Deutsche Bank price target for the stock is $82. The Thomson/First Call consensus price target is $86.62. Shares closed most recently at $53.
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