Computer networking company Arista Networks Inc. (ANET) got another boost Wednesday after a long-term bear on the Street turned bullish on the Cisco Systems Inc. (CSCO) rival. Morgan Stanley foresees further upside to shares, which have already skyrocketed 94% year-to-date (YTD), as the Santa Clara, Calif. company increase its share in the cloud computing, data center, and enterprise markets, with a particular boost from new 400G speed technology. (See also: Behind the Cisco-Arista Battle.)

Morgan Stanley analyst James Faucette raised his rating on ANET to overweight and lifted his price target to $210 from $125, writing that he’s having to “eat humble pie” about his previous reservations on the company.

'Time to Market' Is Everything

Faucette suggests Arista will have a “time to market advantage” due to its software running on its switches, working to help it steal business away from Cisco in the 400-gigabit-per-second market. As a result, the Morgan Stanley analyst expects Arista to grab 19% of the total switching market by 2020, compared to his previous estimate of 14%. He forecasts operating profit at 32% versus the prior model at 25%.

Due to better margins and a greater hold of the market, Faucette raised his Q3 estimates, anticipating Arista to post earnings of $1.15 per share, up from $0.96 earnings per share (EPS) previously forecasted and resting just below the consensus at $1.18 EPS. Further, as Arista continues to outperform its operating margin goal of “mid-20s,” the analysts suggest that a low 30% operating margin is sustainable at Arista.

“Combined with higher share gains, incremental operating leverage in our model lead us to believe that Arista will track to $8 per share earnings by FY20,” concluded Faucette. (See also: Cisco-Rival Arista to Accelerate Growth on 100G Bandwidth.)

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