ARM (NASDAQ:ARM) Trading Up 5.8% - What's Next?

Key Points

• ARM jumped 5.8% Monday to $157.58; analysts are largely bullish with a consensus "Moderate Buy" and an average price target of $172.33, while several firms raised targets (Guggenheim to $240, HSBC to $205, Needham $200, RBC $175).
• ARM beat Q1 estimates with EPS of $0.43 vs. $0.41 and revenue of $1.24B (up 26.3% YoY); the company has a market cap of about $166.5B but a high valuation (P/E ~210).
• Insiders have been selling recently (CFO sold 21,280 shares; CEO sold 7,986; 53,133 shares sold in the last 90 days) even as institutional investors like Morgan Stanley, Invesco and Wellington meaningfully increased their stakes.

ARM Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report) shot up 5.8% on Monday . The stock traded as high as $157.77 and last traded at $157.58. 4,847,661 shares were traded during trading, a decline of 29% from the average session volume of 6,852,726 shares. The stock had previously closed at $148.93.

Analyst Upgrades and Downgrades

Several research firms recently weighed in on ARM. Guggenheim upped their price target on shares of ARM from $201.00 to $240.00 and gave the stock a "buy" rating in a research report on Wednesday, March 25th. Royal Bank Of Canada upped their price target on shares of ARM from $130.00 to $175.00 and gave the stock an "outperform" rating in a research report on Wednesday, March 25th. HSBC upgraded ARM from a "reduce" rating to a "buy" rating and raised their price objective for the stock from $90.00 to $205.00 in a report on Friday, March 20th. Needham & Company LLC upgraded ARM from a "hold" rating to a "buy" rating and set a $200.00 price objective on the stock in a report on Thursday, March 26th. Finally, JPMorgan Chase & Co. cut their price objective on ARM from $180.00 to $145.00 and set an "overweight" rating on the stock in a report on Thursday, February 5th. Eighteen investment analysts have rated the stock with a Buy rating, seven have given a Hold rating and one has assigned a Sell rating to the stock. According to MarketBeat.com, the stock presently has a consensus rating of "Moderate Buy" and an average price target of $172.33.

ARM Stock Up 5.8%

The firm has a market cap of $166.48 billion, a price-to-earnings ratio of 210.11, a price-to-earnings-growth ratio of 6.71 and a beta of 3.33. The business has a 50 day moving average price of $129.80 and a 200-day moving average price of $134.14.

ARM (NASDAQ:ARM - Get Free Report) last posted its earnings results on Thursday, February 5th. The company reported $0.43 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.41 by $0.02. ARM had a return on equity of 14.01% and a net margin of 17.15%.The business had revenue of $1.24 billion during the quarter, compared to analyst estimates of $1.23 billion. During the same quarter last year, the firm earned $0.39 earnings per share. The company's revenue for the quarter was up 26.3% compared to the same quarter last year. Research analysts anticipate that ARM Holdings PLC Sponsored ADR will post 0.9 earnings per share for the current fiscal year.

Insider Buying and Selling

In other ARM news, CFO Jason Child sold 21,280 shares of the firm's stock in a transaction that occurred on Wednesday, March 25th. The stock was sold at an average price of $148.37, for a total transaction of $3,157,313.60. Following the completion of the sale, the chief financial officer owned 174,706 shares in the company, valued at $25,921,129.22. This trade represents a 10.86% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available through the SEC website. Also, CEO Rene A. Haas sold 7,986 shares of the firm's stock in a transaction that occurred on Thursday, March 26th. The shares were sold at an average price of $160.86, for a total value of $1,284,627.96. Following the sale, the chief executive officer owned 282,979 shares of the company's stock, valued at approximately $45,520,001.94. This trade represents a 2.74% decrease in their position. The SEC filing for this sale provides additional information. In the last 90 days, insiders have sold 53,133 shares of company stock valued at $8,288,586.

Institutional Investors Weigh In On ARM

A number of hedge funds have recently bought and sold shares of the business. Morgan Stanley grew its position in shares of ARM by 1.2% in the 4th quarter. Morgan Stanley now owns 3,783,006 shares of the company's stock worth $413,521,000 after acquiring an additional 45,314 shares in the last quarter. Invesco Ltd. grew its position in shares of ARM by 36.9% in the 4th quarter. Invesco Ltd. now owns 2,426,850 shares of the company's stock worth $265,279,000 after acquiring an additional 654,727 shares in the last quarter. Coatue Management LLC grew its position in shares of ARM by 1.8% in the 4th quarter. Coatue Management LLC now owns 2,300,000 shares of the company's stock worth $251,413,000 after acquiring an additional 40,174 shares in the last quarter. Wellington Management Group LLP grew its position in shares of ARM by 41.6% in the 4th quarter. Wellington Management Group LLP now owns 2,149,159 shares of the company's stock worth $234,925,000 after acquiring an additional 631,576 shares in the last quarter. Finally, Schroder Investment Management Group grew its position in shares of ARM by 11.0% in the 4th quarter. Schroder Investment Management Group now owns 1,891,310 shares of the company's stock worth $206,739,000 after acquiring an additional 187,035 shares in the last quarter. Institutional investors and hedge funds 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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