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Arista: Time to Be Worried? Asks Needham

"We are very worried about Arista Networks after the close,” writes Henderson.

They’ve never missed a quarter, he notes, but the stock is way up since Q2:

Arista is expected to post another quarter much like last quarter with 45-50% Revenue growth driven by the upgrade to 100G in Web 2.0. The stock has run on the 50% plus report it posted in CY2Q. If they come in just in line or god forbid miss slightly or guide weak, the stock is highly vulnerable. Arista has never missed a quarter since it came public.

Henderson’s seeing signs of a broad slowdown from the fiber optic vendors, including Oclaro but also Juniper and Applied Optoelectronics (AAOI), which reported disappointing results a few weeks back:

With AAOI having pre-released and Juniper cited weakness in Web 2.0, we are worried the Data Comm 100G segment may be softer than expected broadly. While this may be a temporary slowdown in 100G as Web 2.0 companies have solidly beat numbers and FaceBook announced a a 100% increase in Capex for CY18 last night, it still raises concerns.

That makes him concerned for Ciena (CIEN) as well:

Another derivative from Oclaro was the ACO product, which was the primary driver of growth over the last several years is expected to flatten. Oclaro cited weak demand out of India as part of the cause of that. We think this implies weakness at Ciena and is a cause for concern on CIEN.

Arista stock this morning is up 64 cents at $197.90 in early trading.