ARM (NASDAQ:ARM) Stock Price Down 6.3% - What's Next?

Key Points

• ARM shares fell 6.3% to about $239, with trading volume roughly 53% below the average; the stock remains highly volatile, with a beta of 3.90.
• Analysts maintain a generally positive view, with a consensus “Moderate Buy” rating and an average price target of $305.12, despite several recent target reductions and HSBC’s downgrade to “Hold.”
• ARM exceeded quarterly expectations, reporting $0.45 in EPS and $1.29 billion in revenue, with revenue up 22.4% year over year; however, the stock trades at a very elevated P/E ratio of 246.45.

Arm Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report) dropped 6.3% during trading on Friday . The stock traded as low as $238.66 and last traded at $239.05. 3,833,954 shares traded hands during trading, a decline of 53% from the average daily volume of 8,075,034 shares. The stock had previously closed at $255.21.

Analyst Upgrades and Downgrades

A number of analysts have commented on the stock. Needham & Company LLC reaffirmed a "buy" rating and set a $255.00 price objective on shares of ARM in a research note on Thursday, July 30th. Benchmark began coverage on shares of ARM in a research report on Thursday, July 16th. They set a "hold" rating on the stock. Rosenblatt Securities decreased their target price on ARM from $270.00 to $250.00 and set a "buy" rating for the company in a research report on Friday, July 31st. HSBC downgraded ARM from a "buy" rating to a "hold" rating and increased their price objective for the stock from $255.00 to $315.00 in a research note on Tuesday, July 14th. Finally, UBS Group decreased their price target on shares of ARM from $360.00 to $320.00 and set a "buy" rating for the company in a report on Thursday, July 30th. Eighteen equities research analysts have rated the stock with a Buy rating, seven have issued a Hold rating and one has given a Sell rating to the company's stock. According to MarketBeat.com, the company has a consensus rating of "Moderate Buy" and a consensus target price of $305.12.

ARM Trading Down 6.3%

The stock has a fifty day moving average price of $289.39 and a 200 day moving average price of $234.00. The firm has a market cap of $255.32 billion, a price-to-earnings ratio of 246.45, a price-to-earnings-growth ratio of 7.44 and a beta of 3.90.

ARM (NASDAQ:ARM - Get Free Report) last released its quarterly earnings results on Thursday, July 30th. The company reported $0.45 EPS for the quarter, beating 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 company had revenue of $1.29 billion for the quarter, compared to analyst estimates of $1.26 billion. During the same quarter last year, the firm posted $0.35 earnings per share. The company's quarterly revenue was up 22.4% compared to the same quarter last year. On average, sell-side analysts forecast that Arm Holdings PLC Sponsored ADR will post 1.15 EPS for the current year.

Insider Buying and Selling at ARM

In other news, insider William Abbey sold 6,566 shares of the company's stock in a transaction dated Monday, June 1st. The shares were sold at an average price of $402.72, for a total transaction of $2,644,259.52. Following the completion of the transaction, the insider owned 20,563 shares of the company's stock, valued at approximately $8,281,131.36. This represents a 24.20% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. Also, CAO Laura Kathleen Bartels sold 11,306 shares of the company's stock in a transaction that occurred on Tuesday, June 2nd. The shares were sold at an average price of $392.70, for a total value of $4,439,866.20. Following the completion of the transaction, the chief accounting officer directly owned 12,135 shares of the company's stock, valued at approximately $4,765,414.50. This trade represents a 48.23% decrease in their position. The disclosure for this sale is available in the SEC filing.

Hedge Funds Weigh In On ARM

A number of hedge funds have recently modified their holdings of the stock. Syntax Research Inc. bought a new position in shares of ARM during the first quarter valued at $30,000. Evelyn Partners Investment Management Services Ltd bought a new stake in shares of ARM in the 1st quarter worth about $30,000. Mcguire Capital Advisors Inc. bought a new stake in shares of ARM in the 4th quarter worth about $30,000. Navalign LLC acquired a new stake in shares of ARM during the 4th quarter worth about $33,000. Finally, FWL Investment Management LLC acquired a new stake in shares of ARM during the 2nd quarter worth about $34,000. 7.53% of the stock is owned by institutional investors and hedge funds.

About ARM

Arm Holdings 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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