ARM (NASDAQ:ARM) Trading Down 6.7% - Here's Why

Key Points

• ARM shares fell 6.7% to $253.32 during Tuesday trading, with the stock remaining highly volatile and trading below its 50-day moving average of $310.17.
• Analysts maintain a generally positive view, with 18 Buy ratings and a consensus “Moderate Buy” rating, though price targets vary widely from $250 to $500; the average target is $285.33.
• ARM recently beat quarterly expectations, reporting $0.45 in EPS and $1.29 billion in revenue, up 22.4% year over year. However, insiders have sold 80,921 shares worth $23.3 million over the past 90 days, while the stock’s valuation remains elevated at a P/E ratio above 261.

ARM Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report) was down 6.7% during trading on Tuesday . The stock traded as low as $247.60 and last traded at $253.32. 6,299,199 shares changed hands during mid-day trading, a decline of 24% from the average session volume of 8,285,978 shares. The stock had previously closed at $271.43.

Analyst Ratings Changes

ARM has been the topic of a number of recent research reports. Mizuho lifted their price target on shares of ARM from $425.00 to $500.00 and gave the company an "outperform" rating in a research report on Monday, June 8th. KeyCorp raised their target price on shares of ARM from $300.00 to $430.00 and gave the company an "overweight" rating in a research note on Tuesday, July 14th. UBS Group reduced their target price on shares of ARM from $360.00 to $320.00 and set a "buy" rating on the stock in a report on Thursday, July 30th. Barclays upped their price target on shares of ARM from $250.00 to $360.00 and gave the stock an "overweight" rating in a research report on Monday, June 1st. Finally, Rosenblatt Securities lowered their price target on ARM from $270.00 to $250.00 and set a "buy" rating for the company in a report on Friday, July 31st. Eighteen research analysts have rated the stock with a Buy rating, seven have assigned a Hold rating and one has assigned a Sell rating to the stock. According to MarketBeat, the stock currently has an average rating of "Moderate Buy" and a consensus price target of $285.33.

ARM Trading Down 6.7%

The stock has a market capitalization of $270.57 billion, a price-to-earnings ratio of 261.16, a price-to-earnings-growth ratio of 8.29 and a beta of 3.91. The firm has a 50-day moving average of $310.17 and a 200 day moving average of $226.20.

ARM (NASDAQ:ARM - Get Free Report) last issued its quarterly earnings data on Thursday, July 30th. The company reported $0.45 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.40 by $0.05. ARM had a net margin of 20.25% and a return on equity of 12.24%. The company had revenue of $1.29 billion during the quarter, compared to the consensus estimate of $1.26 billion. During the same quarter last year, the company earned $0.35 earnings per share. ARM's revenue for the quarter was up 22.4% on a year-over-year basis. As a group, research analysts forecast that ARM Holdings PLC Sponsored ADR will post 1.15 EPS for the current year.

Insider Activity

In related news, CFO Jason Child sold 31,920 shares of ARM stock in a transaction on Wednesday, May 20th. The shares were sold at an average price of $226.54, for a total transaction of $7,231,156.80. Following the sale, the chief financial officer owned 174,232 shares of the company's stock, valued at $39,470,517.28. The trade was a 15.48% decrease in their position. The transaction was disclosed in a filing with the SEC, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Charlotte Claire Eaton sold 7,805 shares of the business's stock in a transaction on Thursday, May 21st. The stock was sold at an average price of $290.01, for a total transaction of $2,263,528.05. Following the completion of the transaction, the insider owned 5,000 shares in the company, valued at $1,450,050. This represents a 60.95% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold a total of 80,921 shares of company stock valued at $23,279,024 in the last 90 days.

Institutional Inflows and Outflows

Institutional investors have recently modified their holdings of the business. Amundi increased its holdings in ARM by 24.8% during the 1st quarter. Amundi now owns 11,804 shares of the company's stock worth $1,153,000 after purchasing an additional 2,345 shares during the last quarter. Empowered Funds LLC boosted its stake in shares of ARM by 28.8% during the 1st quarter. Empowered Funds LLC now owns 4,887 shares of the company's stock valued at $522,000 after buying an additional 1,094 shares during the last quarter. Schnieders Capital Management LLC. grew its position in shares of ARM by 9.0% during the second quarter. Schnieders Capital Management LLC. now owns 2,430 shares of the company's stock worth $393,000 after buying an additional 200 shares in the last quarter. Bank of Nova Scotia acquired a new stake in shares of ARM during the second quarter worth approximately $556,000. Finally, State Street Corp increased its stake in shares of ARM by 14.7% in the second quarter. State Street Corp now owns 441,445 shares of the company's stock worth $71,399,000 after buying an additional 56,656 shares during the last quarter. Institutional investors and hedge funds own 7.53% of the company's stock.

ARM Company Profile

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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