ARM (NASDAQ:ARM) Shares Gap Down - Here's Why

Key Points

• ARM shares fell sharply, opening at $242.38 versus the prior close of $264.79 and trading around $247.57. The stock was down about 9%, below its 50-day moving average but near its 200-day average.
• Despite the decline, analysts maintain a broadly positive outlook: ARM has a consensus “Moderate Buy” rating and an average price target of $305.72, although recent ratings included downgrades to “Hold.”
• ARM’s latest quarterly results exceeded expectations, with EPS of $0.45 versus $0.40 forecast and revenue of $1.29 billion, up 22.4% year over year. CFO Jason Child also sold 10,400 shares under a pre-arranged trading plan.

Shares of Arm Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report) gapped down before the market opened on Monday . The stock had previously closed at $264.79, but opened at $242.38. ARM shares last traded at $247.5720, with a volume of 1,077,325 shares trading hands.

Analyst Upgrades and Downgrades

A number of research firms recently weighed in on ARM. Benchmark started coverage on shares of ARM in a research note on Thursday, July 16th. They issued a "hold" rating for the company. Mizuho increased their target price on shares of ARM from $425.00 to $500.00 and gave the stock an "outperform" rating in a research note on Monday, June 8th. Weiss Ratings restated a "hold (c)" rating on shares of ARM in a research note on Friday, July 17th. Guggenheim reaffirmed a "buy" rating and issued a $255.00 price target on shares of ARM in a report on Thursday, July 30th. Finally, HSBC downgraded ARM from a "buy" rating to a "hold" rating and lifted their price target for the company from $255.00 to $315.00 in a research report on Tuesday, July 14th. One analyst has rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating, seven have given a Hold rating and one has issued a Sell rating to the company. According to MarketBeat, the stock currently has a consensus rating of "Moderate Buy" and an average target price of $305.72.

ARM Stock Down 9.0%

The business's 50-day simple moving average is $265.84 and its 200 day simple moving average is $243.60. The firm has a market capitalization of $257.35 billion, a P/E ratio of 248.54, a PEG ratio of 7.85 and a beta of 3.89.

ARM (NASDAQ:ARM - Get Free Report) last announced its quarterly earnings data on Thursday, July 30th. The company reported $0.45 earnings per share for the quarter, topping analysts' consensus estimates of $0.40 by $0.05. ARM had a net margin of 20.25% and a return on equity of 12.24%. The firm had revenue of $1.29 billion during the quarter, compared to analyst estimates of $1.26 billion. During the same period in the previous year, the business posted $0.35 EPS. The business's quarterly revenue was up 22.4% on a year-over-year basis. Sell-side analysts predict that Arm Holdings PLC Sponsored ADR will post 1.15 earnings per share for the current year.

Insider Buying and Selling

In other ARM news, CFO Jason Child sold 10,400 shares of the business's stock in a transaction on Thursday, August 27th. The shares were sold at an average price of $255.33, for a total value of $2,655,432.00. Following the completion of the sale, the chief financial officer directly owned 163,832 shares of the company's stock, valued at $41,831,224.56. The trade was a 5.97% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

Institutional Inflows and Outflows

Large investors have recently modified their holdings of the stock. Morgan Stanley boosted its holdings in ARM by 1.2% during the 4th quarter. Morgan Stanley now owns 3,783,006 shares of the company's stock valued at $413,521,000 after acquiring an additional 45,314 shares during the period. Invesco Ltd. lifted its position in ARM by 36.9% in the fourth quarter. Invesco Ltd. now owns 2,426,850 shares of the company's stock valued at $265,279,000 after purchasing an additional 654,727 shares during the last quarter. Coatue Management LLC lifted its position in ARM by 1.8% in the fourth quarter. Coatue Management LLC now owns 2,300,000 shares of the company's stock valued at $251,413,000 after purchasing an additional 40,174 shares during the last quarter. Wellington Management Group LLP boosted its stake in shares of ARM by 41.6% during the fourth quarter. Wellington Management Group LLP now owns 2,149,159 shares of the company's stock valued at $234,925,000 after purchasing an additional 631,576 shares during the period. Finally, Schroder Investment Management Group boosted its stake in shares of ARM by 11.0% during the fourth quarter. Schroder Investment Management Group now owns 1,891,310 shares of the company's stock valued at $206,739,000 after purchasing an additional 187,035 shares during the period. Hedge funds and other institutional investors own 7.53% of the company's stock.

About ARM

Arm Holdings plc is a semiconductor and software intellectual property company headquartered in Cambridge, England. Rather than manufacturing chips, Arm develops processor architectures and technology designs that it licenses to semiconductor companies, device manufacturers and other technology businesses for use in their own products.

Arm's portfolio includes central processing unit (CPU) architectures and processor cores, graphics processing units (GPUs), systems IP, interconnect technology, security solutions and related software and development tools.

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