Arm Holdings PLC
The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.
Goldman Sachs On Arm Holdings
Analyst Toshiya Hari reiterated a Buy rating while raising the price target from $144 to $159.
Arm reported its quarterly revenues at $844 million, 4% higher than consensus, Hari said in a note. The company's non-GAAP earnings of 30 cents per share and gross margins of 97.2% also beat expectations, Hari added.
The midpoint of management's fiscal third-quarter guidance for revenue and non-GAAP earnings guidance, at $945 million and 34 cents per share, came in 1% and 2% above consensus, respectively, the analyst stated. Arm is likely to be "a long-term share gainer, particularly in the Cloud Infrastructure, PC and Automotive end-markets," while there is "upside potential to royalty rates over the medium-term as adoption of v9 (i.e. newest-gen Arm CPU architecture) and CSS (Compute Subsystems) steadily grow," Hari further wrote.
KeyBanc Capital Markets On Arm Holdings
Analyst John Vinh reaffirmed an Overweight rating and price target of $195.
Arm reported "strong" quarterly results, beating expectations, "driven by stronger licensing revs, which offset weaker royalties that missed," Vinh said. Lower royalties were due to "continued correction in IoT, which was offset by stronger smartphone AP royalties," he added.
Royalty expansion was driven by Armv9 adoption of 25%, the analyst stated. "Moving forward royalty expansion is expected to be driven by increasing Armv9 and CSS (11 licensees) adoption," he further wrote.
Rosenblatt Securities On Arm Holdings
Analyst Hans Mosesmann maintained a Buy rating and price target of $180.
Arm delivered a "solid" beat-and-raise quarter on the back of "stronger royalty and licensing trends driven by continued v9 architecture penetration (25% of royalties), smartphone recovery (units and ARM ASP position), emerging DC share gains, automotive, and CSS engagements that are broadening," Mosesmann wrote in a note.
Armv9 penetration and multi-year ASP (average selling price) tailwinds "are unprecedented," the analyst stated. CSS engagement momentum could more than double the company's current royalty rates into double digits, he added.
Needham On Arm Holdings
Analyst Charles Shi reiterated a Hold rating on the stock.
The company guided to revenues of $945 million at the midpoint for the fiscal third quarter, higher than consensus estimate by $15 million, Shi said. The guidance upside reflects a larger contribution from licensing revenues, rather than royalty revenues, he added.
Management kept their full-year guidance unchanged, which implies royalty downside in the fiscal fourth quarter, the analyst stated. Arm Holdings expects some large licensing deals to be closed in March, which does not require Qualcomm Inc's
ARM Price Action: Shares of Arm Holdings had risen by 4.27% to $150.86 at the time of publication on Thursday.