Arista Networks initiated with a Neutral at Citi

Citi initiated coverage of Arista Networks with a Neutral rating and $160 price target. The analyst initiated coverage of the communication equipment sector, saying equipment orders have stabilized after a sharp 30% quarter-over-quarter drop in the March quarter. Longer-term, big data continues to drive the need for higher network capacity with 100G for enterprises, 400G for Cloud, and 800G and beyond for artificial intelligence, the analyst tells investors in a research note. The firm likes Arista in the datacenter switching market and its exposure to the generative AI “megatrend,” but is concerned of multiple compression should 400G cloud spend slow further this year.