Guggenheim cuts Arm Holdings target to $147, keeps Buy rating

On Thursday, Guggenheim adjusted its price target for Arm Holdings (NASDAQ:ARM) shares, reducing it to $147 from the previous $180, while sustaining a Buy rating on the stock. The revision follows Arm’s latest earnings report, which revealed a mixed financial performance. According to InvestingPro data, ARM has demonstrated strong revenue growth of 25.73% over the last twelve months, with total revenue slightly surpassing market expectations, thanks to higher Royalty revenue which helped to balance out a dip in License revenue. The company maintains impressive gross profit margins of 96.37%, while operating expenses came in under consensus, contributing to earnings per share that exceeded estimates.

Arm Holdings saw its Arm v9 product’s contribution rise by 500 basis points, reaching 30%, which indicates ongoing momentum for the platform. The company’s strong financial position is evident in its current ratio of 4.96, showing ample liquidity to meet short-term obligations. However, the company’s forecast for the first quarter of fiscal year 2026 fell short of analyst projections. While Royalty revenue met predictions, License revenue did not. In a notable shift, Arm Holdings has opted against providing full-year guidance, mirroring the stance of many of its customers. This decision is largely attributed to the current uncertainties surrounding tariffs.

Although Arm does not anticipate a direct hit from tariffs, the company acknowledged that potential indirect effects through the end-markets it serves could introduce more unpredictability. Despite these concerns, Guggenheim reaffirms its Buy rating for Arm Holdings. InvestingPro analysis reveals several positive indicators, including expected net income growth this year and significant return over the last week (+7.62%). The firm’s analysts believe in the company’s long-term prospects and its strong position to capitalize on AI-related investments, especially in the area of Infrastructure. For deeper insights, InvestingPro offers 11 additional tips and a comprehensive Pro Research Report for ARM.

Guggenheim’s revised price target of $147 takes into account the possible ongoing geopolitical uncertainties that could influence the company’s performance in the upcoming year. With a market capitalization of $130.9 billion and a moderate debt level, ARM maintains a strong financial foundation. The firm’s stance reflects confidence in Arm’s enduring business strengths and its ability to navigate through current market challenges. Based on InvestingPro’s Fair Value analysis, the stock currently appears to be trading above its intrinsic value, suggesting investors should carefully consider their entry points.

In other recent news, Arm Holdings reported record fourth-quarter revenue, surpassing consensus expectations, with notable increases in both Licensing and Royalties segments. Despite this strong performance, the company’s guidance for the upcoming quarter fell slightly below market expectations, with anticipated revenue of $1.05 billion and earnings per share (EPS) of $0.34, influenced by increased operational expenses. Analysts from Rosenblatt, KeyBanc, Mizuho (NYSE:MFG), and JPMorgan have adjusted their price targets for Arm Holdings, reflecting these developments. Rosenblatt reduced its target to $180, KeyBanc to $175, Mizuho to $160, and JPMorgan to $150, while maintaining positive ratings. Analysts highlighted the significant growth in Arm’s v9 architecture penetration, now accounting for over 30% of royalties, driven by adoption across various sectors. The company’s decision not to provide full-year guidance is attributed to uncertainties surrounding trade and tariffs, which could impact its royalty business. Despite these challenges, Arm Holdings remains focused on expanding its engineering base and investing in AI and system-level initiatives to drive future growth.

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