ARM (NASDAQ:ARM) Stock Price Down 5% - Here's Why

Key Points

• ARM shares fell about 5% intraday to roughly $136.96 on Monday, trading volume was ~7.97M shares (about 17% above the average session volume).
• Analyst views are mixed: Goldman Sachs downgraded ARM to "sell" with a $120 target, while the street consensus remains a "Moderate Buy" (19 Buys, 6 Holds, 1 Sell) with an average price target of $168.17.
• Company and market signals diverge: ARM slightly beat quarterly EPS and reported 26.3% revenue growth year-over-year, but insiders (including the CEO and CFO) have recently sold shares and the stock trades at a high valuation (PE ~182.6).

ARM Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report)'s share price fell 5% during mid-day trading on Monday . The company traded as low as $136.00 and last traded at $136.96. 7,967,406 shares were traded during mid-day trading, an increase of 17% from the average session volume of 6,829,024 shares. The stock had previously closed at $144.13.

Wall Street Analysts Forecast Growth

Several brokerages have recently commented on ARM. The Goldman Sachs Group downgraded shares of ARM from a "neutral" rating to a "sell" rating and lowered their price objective for the company from $160.00 to $120.00 in a research note on Monday, December 15th. Bank of America reaffirmed a "neutral" rating and set a $120.00 price target on shares of ARM in a research report on Tuesday, January 13th. KeyCorp reiterated an "overweight" rating on shares of ARM in a report on Thursday, February 5th. Raymond James Financial raised ARM from a "market perform" rating to an "outperform" rating and set a $166.00 target price on the stock in a research note on Wednesday, March 25th. Finally, New Street Research raised ARM from a "neutral" rating to a "buy" rating in a research note on Thursday, February 5th. Nineteen equities research analysts have rated the stock with a Buy rating, six have issued a Hold rating and one has assigned a Sell rating to the stock. According to MarketBeat, the company currently has an average rating of "Moderate Buy" and an average price target of $168.17.

ARM Trading Down 5.0%

The stock has a market cap of $144.70 billion, a PE ratio of 182.61, a P/E/G ratio of 9.10 and a beta of 4.11. The business has a fifty day simple moving average of $122.48 and a two-hundred day simple moving average of $134.16.

ARM (NASDAQ:ARM - Get Free Report) last released its quarterly earnings results on Thursday, February 5th. The company reported $0.43 earnings per share for the quarter, beating the consensus estimate of $0.41 by $0.02. The company had revenue of $1.24 billion for the quarter, compared to analyst estimates of $1.23 billion. ARM had a return on equity of 14.01% and a net margin of 17.15%.The firm's revenue was up 26.3% on a year-over-year basis. During the same period in the previous year, the company posted $0.39 earnings per share. On average, research analysts predict that ARM Holdings PLC Sponsored ADR will post 0.9 earnings per share for the current year.

Insider Transactions at ARM

In related news, CEO Rene A. Haas sold 7,986 shares of the business's stock in a transaction dated Thursday, March 26th. The shares were sold at an average price of $160.86, for a total transaction of $1,284,627.96. Following the sale, the chief executive officer owned 282,979 shares of the company's stock, valued at $45,520,001.94. The trade was a 2.74% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is available at this link. Also, CFO Jason Child sold 21,280 shares of the firm's stock in a transaction that occurred on Wednesday, March 25th. The shares were sold at an average price of $148.37, for a total transaction of $3,157,313.60. Following the transaction, the chief financial officer directly owned 174,706 shares of the company's stock, valued at $25,921,129.22. This represents a 10.86% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold a total of 53,133 shares of company stock worth $8,288,586 over the last ninety days.

Institutional Trading of ARM

Several hedge funds and other institutional investors have recently made changes to their positions in the stock. Capital Research Global Investors bought a new stake in ARM during the 3rd quarter valued at about $243,098,000. Northwestern Mutual Wealth Management Co. lifted its stake in shares of ARM by 2,623.5% in the fourth quarter. Northwestern Mutual Wealth Management Co. now owns 1,671,787 shares of the company's stock worth $182,743,000 after buying an additional 1,610,403 shares in the last quarter. Hyperion Asset Management Ltd purchased a new stake in shares of ARM during the third quarter valued at approximately $202,980,000. Employees Provident Fund Board purchased a new stake in shares of ARM during the fourth quarter valued at approximately $120,241,000. Finally, Invesco Ltd. increased its position in shares of ARM by 139.9% during the second quarter. Invesco Ltd. now owns 1,381,906 shares of the company's stock valued at $223,509,000 after acquiring an additional 805,886 shares in the last quarter. Hedge funds and other institutional investors own 7.53% of the company's stock.

About ARM

Arm Limited NASDAQ: ARM is a global semiconductor IP company best known for designing energy-efficient processor architectures and related technologies that underpin a wide range of computing devices. Founded in 1990 as a joint venture between Acorn Computers, Apple and VLSI Technology and headquartered in Cambridge, England, Arm develops the ARM instruction set architectures and core processor designs that chipmakers license and integrate into custom system-on-chip (SoC) products. The company operates a licensing and royalty business model rather than manufacturing chips itself.

Arm's product portfolio includes CPU core families (such as Cortex and Neoverse lines), GPU and multimedia IP (Mali), neural processing units (Ethos) and a suite of system and physical IP blocks.

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