ARM (NASDAQ:ARM) Shares Gap Up - Should You Buy?

Key Points

• ARM shares gapped up from a prior close of $243.98 to open at $262.00, trading near $261.73.
• Analysts maintain a generally positive outlook, with a consensus “Moderate Buy” rating and an average price target of $305.72, although targets range widely from $212 to $500.
• ARM recently exceeded quarterly expectations, reporting $0.45 in EPS and $1.29 billion in revenue, but its valuation remains elevated at a P/E ratio of 269.09 and the CFO sold shares under a pre-arranged trading plan.

Arm Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report)'s share price gapped up prior to trading on Thursday . The stock had previously closed at $243.98, but opened at $262.00. ARM shares last traded at $261.7270, with a volume of 1,000,668 shares trading hands.

Analyst Upgrades and Downgrades

Several analysts recently commented on the stock. Mizuho increased their target price on shares of ARM from $425.00 to $500.00 and gave the company an "outperform" rating in a research note on Monday, June 8th. Susquehanna boosted their price target on shares of ARM from $300.00 to $320.00 and gave the company a "positive" rating in a report on Tuesday, July 21st. Wells Fargo & Company reduced their price target on shares of ARM from $350.00 to $280.00 and set an "overweight" rating for the company in a research report on Thursday, July 30th. Piper Sandler started coverage on shares of ARM in a research note on Wednesday, September 9th. They issued an "overweight" rating and a $320.00 price objective for the company. Finally, Morgan Stanley lifted their price objective on shares of ARM from $202.00 to $212.00 and gave the stock an "equal weight" rating in a research report on Thursday, July 30th. One investment analyst has rated the stock with a Strong Buy rating, eighteen have given a Buy rating, seven have issued a Hold rating and one has issued a Sell rating to the stock. Based on data from MarketBeat, ARM has a consensus rating of "Moderate Buy" and an average target price of $305.72.

ARM Price Performance

The firm's fifty day moving average is $261.88 and its 200 day moving average is $245.97. The firm has a market capitalization of $278.17 billion, a price-to-earnings ratio of 269.09, a PEG ratio of 7.17 and a beta of 3.89.

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

Insider Buying and Selling at ARM

In other news, CFO Jason Child sold 10,400 shares of the company'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 transaction, the chief financial officer directly owned 163,832 shares of the company's stock, valued at approximately $41,831,224.56. This represents a 5.97% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

Institutional Inflows and Outflows

Institutional investors and hedge funds have recently bought and sold shares of the company. IKE Capital LLC grew its stake in shares of ARM by 88.7% in the 2nd quarter. IKE Capital LLC now owns 5,331 shares of the company's stock valued at $1,890,000 after buying an additional 2,506 shares in the last quarter. Capstone Financial Advisors Inc. acquired a new position in ARM in the second quarter worth approximately $308,000. MCF Advisors LLC raised its position in ARM by 11.7% during the second quarter. MCF Advisors LLC now owns 764 shares of the company's stock valued at $271,000 after acquiring an additional 80 shares in the last quarter. BlueCrest Capital Management Ltd bought a new position in ARM during the second quarter valued at approximately $1,359,000. Finally, NorthRock Partners LLC acquired a new stake in ARM in the second quarter valued at approximately $649,000. 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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