The British company generates most of its sales in the smartphone market, of which it has a 99 percent share with Google’s Android devices and Apple’s iOS devices.
Goldman Sachs said Monday it expects “Arm will not only expand its presence in the smartphone market primarily through higher licensing fees, but also expand its reach into applications for which it is under-indexed.”
The broker and others, including Citi, Deutsche Bank and TD Cowen, have set price targets in the range of $57 to $85, with the most bullish assessment coming from Rosenblatt Securities. Arm shares last closed at $54.08, compared to its IPO price of $51.
The stock was last up 2.8 percent at $55.56 on Monday, while the Philadelphia Semiconductors index slipped more than 1 percent.
TD Cowen said Arm faces some challenges from the weak smartphone market, but its current sales represent an “under-monetization of its importance to the industry.”
Citi forecast that Arm could become one of the fastest-growing major chip companies by fiscal 2027, with average annual revenue growth of 18 percent.
Such growth would benefit SoftBank, which told investors before the Arm IPO that it intends to remain majority owner of the company it considers its crown jewel.
However, some brokers, including HSBC, urged caution, saying Arm shares could remain range-bound as uncertainty over a smartphone market recovery pressures earnings.
At least 17 brokerages initiated coverage on Arm, with an average rating of “Buy” and an average price target of $63.50.
Reuters
Comments are closed.