Arista Networks, Inc.

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Arista Networks, Inc. stock analysis ANET overview
Bullish +75

3 More Stocks to Buy After Earnings

🎙️ Susan Dziubinski introduces three additional wide-moat stocks recommended by Morningstar analysts for purchase after earnings.

📈 Arista Networks is highlighted as a technology leader in high-speed switching with a wide economic moat based on intangible assets and customer switching costs.

💰 Morningstar raised its fair value estimate for Arista from $175 to $190 due to stronger forecasts for high-speed data center revenue growth over the next three years.

🏦 Charles Schwab is noted for its wide economic moat driven by a durable cost advantage and deepening customer relationships through an expanding service menu.

📊 Morningstar increased its fair value estimate for Charles Schwab from $111 to $114 following quarterly outperformance and a constructive short-term interest rate environment.

🛡️ Northrop Grumman is identified as a defense contractor with a wide economic moat and exposure to early-stage military development programs in space, missiles, and aircraft systems.

🚀 Morningstar raised its fair value estimate for Northrop Grumman from $630 to $640 primarily due to a slight increase in the aeronautics forecast.

💹 All three stocks—Arista Networks, Charles Schwab, and Northrop Grumman—are currently trading below their respective Morningstar fair value estimates.

📰 Readers are directed to read Morningstar's full reports on each of the three recommended stocks via provided links.

🎧 Listeners are encouraged to tune into The Morning Filter podcast weekly for more stock ideas and insights.

🌐 Additional resources are available at Morningstar.com for further research and information.

👥 The research behind this segment was provided by Morningstar director Sean Dunlop, senior analyst William Kerwin, and analyst Nicolas Owens.

⚖️ The authors of the article disclose that they do not own shares in any of the securities mentioned.

📜 Readers are invited to review Morningstar's editorial policies for transparency on content creation.

Bullish Signals
  • Arista Networks is viewed as the technology leader in high-speed switching for enterprise networking with a wide economic moat based on intangible assets and customer switching costs.
  • Morningstar raised its fair value estimate on Arista Networks to $190 from $175 after earnings, driven by a stronger forecast for high-speed data center revenue growth over the next three years.
  • Charles Schwab has carved out a wide economic moat thanks to a durable cost advantage and an excellent job of deepening customer relationships through its trading and advisory platform.
  • Morningstar increased its fair value estimate on Charles Schwab to $114 from $111 after earnings due to quarterly outperformance and a more constructive short-term interest rate environment.
  • Northrop Grumman enjoys exposure to big military development programs that are early in their lifecycle, positioning it well to meet growing demand for space, missiles, and aircraft systems.
  • Morningstar increased its fair value estimate on Northrop Grumman to $640 from $630 after earnings, primarily due to a slight increase in the aeronautics forecast.
Risk Factors
  • Arista Networks' fair value estimate was raised to $190 from $175, but the stock is still trading below this target, indicating potential upside risk if market sentiment shifts.
  • Charles Schwab's fair value increase to $114 relies on a 'more constructive short-term interest rate environment,' which could reverse if rates rise again.
Full Analysis
Morningstar analysts have identified three additional wide-moat stocks as attractive buys following recent earnings, alongside four previously highlighted picks. The first recommendation is Arista Networks, which the firm views as a technology leader in high-speed switching for enterprise networking with a wide economic moat based on intangible assets and customer switching costs. Morningstar raised its fair value estimate for Arista from $175 to $190 after earnings, driven by stronger forecasts for high-speed data center revenue growth over the next three years, noting the stock remains undervalued relative to this new target. The second pick is Charles Schwab, which maintains a wide economic moat due to a durable cost advantage and deepening customer relationships through its trading and advisory platform. Morningstar increased its fair value estimate for Schwab from $111 to $114 following quarterly outperformance and a more constructive short-term interest rate environment, with shares currently trading well below this adjusted fair value. The third recommendation is Northrop Grumman, a defense contractor with a wide economic moat and exposure to major military development programs in their early lifecycle stages. The firm increased its fair value estimate for Northrop from $630 to $640 after earnings, primarily due to a slight increase in the aeronautics forecast, while maintaining that the stock is trading below its fair value.