Analyst Christopher Rolland from Susquehanna reiterated a Hold rating on ARM Holdings PLC ADR (ARM – Research Report) and increased the price target to $140.00 from $118.00.
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Christopher Rolland’s rating is based on ARM Holdings’ recent financial performance and future outlook. The company reported better-than-expected earnings for the December quarter, yet the revenue guidance for the following quarter was merely in line with expectations. This, combined with higher operating expenses, resulted in a less favorable earnings per share forecast.
Looking ahead, ARM’s operating expenses are anticipated to remain high due to increased investment in research and development. This elevated cost structure diminishes the potential for improved profit margins in the near term. Additionally, while ARM’s royalty revenue mix is diversifying with growth in the cloud and networking sectors, the smartphone segment still constitutes a significant portion of their income. Given these factors, Rolland remains cautious and recommends a Hold rating, opting to wait for a more advantageous risk/reward profile before making a more bullish recommendation.