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Investing.com - Mizuho (NYSE:MFG) has raised its price target on Arm Holdings (NASDAQ:ARM) to $180.00 from $160.00 while maintaining an Outperform rating on the stock. The company, currently trading at a P/E ratio of 173x and showing strong financial health according to InvestingPro metrics, has demonstrated impressive revenue growth of 24% over the last twelve months.
The research firm kept its June quarter revenue and EPS estimates unchanged at $1.07 billion and $0.35, respectively, compared to consensus estimates of $1.05 billion and $0.35. With a robust current ratio of 5.2x and operating with moderate debt levels, ARM maintains a strong financial position. According to InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value, though 14+ additional exclusive insights are available to Pro subscribers.
Mizuho increased its fiscal 2026 estimates from $4.72 billion and $1.74 to $4.82 billion and $1.80, above consensus projections of $4.77 billion and $1.78, while also raising fiscal 2027 estimates from $5.82 billion and $2.49 to $5.96 billion and $2.53.
The firm views Arm as a "major beneficiary" of Cobalt, which it expects to grow 100% year-over-year in 2025, with Azure penetration increasing from 5-10% in 2024 to 15-20% in 2025 and potentially reaching approximately 33% in 2026.
Additional growth drivers include potential tailwinds from an OpenAI/ARM AI processor for Project Stargate with Softbank (OTC:SFTBY), a possible CPU partnership with META (NASDAQ:META), and access to approximately 1,500 engineers for CPU/GPU/DPU development through Softbank’s acquisitions of Ampere and Graphcore, though the firm notes the Ampere deal faces FTC scrutiny.
In other recent news, Arm Holdings reported record-breaking fourth-quarter results, achieving over $1 billion in revenue for the first time. The company’s financial performance included $1.241 billion in revenue and earnings per share of $0.55, slightly exceeding Wall Street expectations. Arm’s licensing revenue hit an all-time high, and its royalty revenue per chip also set a new record. In response to these developments, TD Cowen maintained a Buy rating on Arm Holdings but lowered its price target to $155, citing conservative guidance and uncertainties affecting growth projections. Meanwhile, Guggenheim raised its price target for Arm Holdings to $187, highlighting increased visibility in the company’s license revenue. Mizuho Securities maintained an Outperform rating with a $160 price target, projecting steady growth in licensing and royalties. Despite positive growth prospects, Benchmark reiterated a Hold rating, pointing to Arm’s premium valuation. These updates reflect a mix of optimism and caution among analysts regarding Arm Holdings’ future performance.
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