Traders Purchase Large Volume of ARM Call Options (NASDAQ:ARM)

Key Points

• Traders bought 83,917 call options on ARM on Thursday, about 52% above the stock's average call volume, indicating unusually large bullish options activity.
• ARM shares traded up ~2.2% to $162.81 (market cap ~$172B), and analyst sentiment has strengthened with an average target of ~$174.83 and notable raises including Guggenheim to $240 and HSBC upgrading to a Buy.
• Offsetting the bullish signals, insiders have been selling recently: the CFO and CEO trimmed positions and insiders sold 53,133 shares (~$8.29M) in the last 90 days.

ARM Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report) was the recipient of unusually large options trading activity on Thursday. Stock traders acquired 83,917 call options on the stock. This represents an increase of approximately 52% compared to the average volume of 55,078 call options.

ARM Stock Up 2.2%

NASDAQ:ARM traded up $3.47 on Thursday, reaching $162.81. The stock had a trading volume of 4,226,002 shares, compared to its average volume of 6,760,846. The company has a market capitalization of $172.01 billion, a P/E ratio of 216.91, a price-to-earnings-growth ratio of 7.27 and a beta of 3.33. ARM has a 1-year low of $95.32 and a 1-year high of $183.16. The stock has a fifty day moving average price of $133.04 and a 200-day moving average price of $134.58.

ARM (NASDAQ:ARM - Get Free Report) last announced its earnings results on Thursday, February 5th. The company reported $0.43 earnings per share for the quarter, topping analysts' consensus estimates of $0.41 by $0.02. The company had revenue of $1.24 billion during the quarter, compared to the consensus estimate of $1.23 billion. ARM had a net margin of 17.15% and a return on equity of 14.01%. The company's revenue was up 26.3% on a year-over-year basis. During the same period in the previous year, the firm posted $0.39 earnings per share. Sell-side analysts predict that ARM will post 0.9 earnings per share for the current fiscal year.

Analysts Set New Price Targets

ARM has been the subject of a number of research reports. Weiss Ratings restated a "hold (c)" rating on shares of ARM in a report on Wednesday, January 21st. Morgan Stanley reiterated an "equal weight" rating and issued a $150.00 target price (up from $135.00) on shares of ARM in a research report on Tuesday, April 7th. Guggenheim raised their price target on shares of ARM from $201.00 to $240.00 and gave the company a "buy" rating in a report on Wednesday, March 25th. Susquehanna raised their price target on shares of ARM from $170.00 to $210.00 and gave the company a "positive" rating in a report on Thursday. Finally, HSBC upgraded shares of ARM from a "reduce" rating to a "buy" rating and raised their target price for the company from $90.00 to $205.00 in a research note on Friday, March 20th. Eighteen equities research analysts have rated the stock with a Buy rating, six have assigned a Hold rating and one has given a Sell rating to the company's stock. According to MarketBeat.com, ARM has an average rating of "Moderate Buy" and an average target price of $174.83.

Insider Buying and Selling

In other news, CFO Jason Child sold 21,280 shares of ARM 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 sale, the chief financial officer owned 174,706 shares of the company's stock, valued at approximately $25,921,129.22. The trade was a 10.86% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is accessible through the SEC website. Also, CEO Rene A. Haas sold 7,986 shares of ARM 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 directly owned 282,979 shares in the company, valued at approximately $45,520,001.94. This trade represents a 2.74% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. In the last ninety days, insiders have sold 53,133 shares of company stock worth $8,288,586.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently made changes to their positions in the stock. Morgan Stanley boosted its holdings in ARM by 1.2% during the fourth quarter. Morgan Stanley now owns 3,783,006 shares of the company's stock worth $413,521,000 after purchasing an additional 45,314 shares during the last quarter. Invesco Ltd. raised its position in shares of 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 period. Coatue Management LLC raised its position in shares of 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 period. Wellington Management Group LLP raised its position in shares of ARM by 41.6% in 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 raised its position in shares of ARM by 11.0% in 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. 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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