Arista Networks (ANET), a networking equipment company, is reportedly in the process of acquiring VeloCloud, which is a networking business unit owned by Broadcom (AVGO), according to The Information. VeloCloud provides both networking software and hardware to major clients, including telecom service providers. Although the exact price of the deal is unknown, it is expected to be under $1 billion, as the unit was generating around $300 million in annual recurring revenue as of October 2024.
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Interestingly, VeloCloud specializes in software-defined wide-area networking (SD-WAN), which is a technology that allows companies with many remote employees or branch offices to securely connect to corporate networks using the internet. It also helps protect sensitive data by encrypting connections to cloud applications. Unsurprisingly, this technology is becoming increasingly important as more businesses operate in hybrid and remote environments.
It is worth noting that Arista, which competes with Cisco, launched its own SD-WAN product in 2023 and is now looking to expand in that space. The company plans to hire about half of VeloCloud’s 1,000 employees and has already begun offering positions. VeloCloud was originally acquired by VMware in 2017 for $450 million, and later became part of Broadcom when it bought VMware in 2023. Both Arista and Broadcom declined to comment on the deal.
Is ANET Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ANET stock based on 11 Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ANET price target of $109.23 per share implies 11.3% upside potential.
