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Benchmark analyst firm reiterated its Hold rating on Arm Holdings (NASDAQ:ARM) following a virtual conference call with the company’s Senior Director of Investor Relations, Alexis Waadt. According to InvestingPro data, ARM currently trades at $140.20, with analyst price targets ranging from $73 to $180, reflecting mixed market sentiment.
The firm expressed encouragement about Arm’s strong fundamental performance drivers highlighted during its recent earnings call, including robust royalty and licensing revenue. With an impressive 96.98% gross margin and 23.94% year-over-year revenue growth, Arm has demonstrated solid execution. Benchmark noted the company’s globally expanding licensing opportunities, dominant position in the mobile market, and newer growth drivers in AI PCs, data centers, IoT, automotive, and consumer electronics.
Benchmark acknowledged Arm’s diverse revenue streams, strategic partnerships, and focus on innovation position it well for future growth, particularly as royalty rates expand across its newest platforms. The conference call highlighted Arm’s adaptability in navigating market challenges and its proactive approach to leveraging emerging opportunities in the AI landscape.
Despite positive growth prospects, Benchmark pointed to Arm’s premium valuation as a key factor in maintaining its Hold rating. The firm noted Arm trades at 59 times its FY27 estimates, the highest among its peers. InvestingPro analysis indicates the stock is currently overvalued, trading at a P/E ratio of 172.7x and appearing on the most overvalued stocks list. Subscribers can access 12 additional ProTips and comprehensive valuation metrics through InvestingPro’s detailed research report.
Benchmark also referenced the significant recent price appreciation of Arm shares, which have risen 75% since their early April lows. The firm indicated it would consider a more positive recommendation at a more attractive valuation level.
In other recent news, Arm Holdings reported record-breaking fourth-quarter results, with revenues exceeding $1 billion for the first time. The company achieved $1.241 billion in revenue and earnings per share (EPS) of $0.55, slightly beating Wall Street’s expectations. Annual revenue for fiscal year 2025 surpassed $4 billion, with royalty revenue alone exceeding $2 billion, marking a significant year-on-year increase in smartphone-related revenues. Despite the strong performance, TD Cowen reduced its price target for Arm Holdings to $155, citing conservative future guidance and uncertainties surrounding tariffs. Guggenheim also adjusted its price target to $147, noting mixed financial performance and the absence of full-year guidance due to market uncertainties. Meanwhile, Rosenblatt Securities lowered its target to $180, maintaining a Buy rating, and highlighted Arm’s record revenue in Licensing and Royalties. Mizuho (NYSE:MFG) Securities maintained an Outperform rating with a $160 target, projecting steady growth in licensing and royalties. These developments reflect the varied analyst perspectives on Arm Holdings’ financial outlook and market position.
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