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On Thursday, Guggenheim maintained a Buy rating on ARM Holdings (NASDAQ:ARM) and increased its price target to $180 from $169. The adjustment follows ARM’s financial results for the third fiscal quarter of 2025 (F3Q25), where the company surpassed consensus estimates on several key performance indicators, though its cash flow fell slightly short. Currently trading at $162 with a market capitalization of $182.1 billion, ARM has delivered impressive returns with a year-to-date gain of 40.45%. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with a P/E ratio of 227.49. The firm’s fourth-quarter guidance (F4Q25) was reported to align closely with expectations.
ARM’s royalty revenues exceeded forecasts, attributed to a combination of higher average selling prices (ASPs) for v9 and CSS products. The company maintains an impressive gross profit margin of 95.98% and has achieved revenue growth of 24.56% over the last twelve months. License revenue is projected to see a 60% increase in F4Q25, fueled in part by deals that are set to be recognized within the period. Despite these positive developments, Guggenheim has chosen to lower its medium-term royalty revenue forecasts, still anticipating around 20% growth over the next few years. Conversely, the firm has raised its license revenue outlook.
ARM’s consistent performance in v9 royalties, which have maintained a 25% share of total royalties for three consecutive quarters, showed a significant year-over-year growth of 106% in F3Q25. The company’s prospects in AI technology were highlighted, with ARM being a technology partner in initiatives like Stargate and Cristal Intelligence. These ventures, according to Guggenheim, position ARM at the forefront of the next technological era, although continued investments may postpone further financial leverage.
The analyst from Guggenheim expressed a positive outlook on ARM’s role in the evolving AI landscape, noting the company’s strategic approach and the management’s understanding of AI’s development. While acknowledging the potential benefits to cloud vendors in the AI space, the analyst suggested that ARM’s positioning is advantageous and distinct from other software subsectors that may face challenges in monetizing AI technology. The raised price target to $180 reflects a more optimistic long-term estimate for ARM’s performance. InvestingPro subscribers can access 16 additional ProTips and a comprehensive Pro Research Report that provides deep insights into ARM’s AI positioning and financial health metrics.
In other recent news, Arm Holdings has seen a flurry of activity from various analyst firms. Rosenblatt Securities increased the company’s stock target to $225, maintaining a Buy rating. This adjustment follows an analysis of Arm Holdings’ financial projections, with Rosenblatt raising its fiscal year 2025 revenue and non-GAAP earnings per share estimates slightly upward.
Mizuho (NYSE:MFG) Securities also adjusted its price target for Arm Holdings, raising it to $180 and maintaining an Outperform rating. The company’s recent financial report showed revenues surpassing consensus estimates, and Mizuho anticipates a significant year-over-year increase in licensing revenues for the upcoming quarter.
Jefferies analyst Janardan Menon raised Arm Holdings’ stock price target to $195, reiterating a Buy rating. Menon forecasts a significant 24% revenue growth for Arm in the fiscal year 2025, attributing this to a combination of licensing and royalty increases.
HSBC analyst Frank Lee revised the price target for Arm Holdings stock, increasing it to $115, but maintained a Reduce rating. The company’s third fiscal quarter of 2025 reported revenue surpassed both HSBC’s and consensus estimates.
Lastly, UBS analyst Timothy Arcuri reaffirmed a Buy rating and a $215.00 price target for ARM Holdings stock. The company’s December quarter results exceeded expectations, and Arcuri anticipates that AI will continue to drive growth across all of Arm’s key markets. These recent developments present a mixed, but largely optimistic, outlook for Arm Holdings’ future performance.
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