William Blair analyst Sebastien Naji has maintained their bullish stance on ARM stock, giving a Buy rating today.
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Sebastien Naji has given his Buy rating due to a combination of factors that highlight ARM Holdings PLC ADR’s potential for strong earnings growth. Despite some uncertainties surrounding the company’s product strategy as it aims to ascend the silicon value chain, there is optimism about its ability to adapt to this business model shift. The company is expected to continue driving earnings growth through an increasing number of licensing agreements and improved royalty rates for its newer intellectual properties, such as v9 and CSS.
Furthermore, although there are margin pressures from a transition to more product revenues, there is a significant opportunity for an increase in gross profit dollars. This potential growth in gross profits is anticipated to bolster the company’s earnings power over the long term. ARM is seen as well-positioned to benefit from the global rise in computing demand, supported by factors such as increased royalty revenues, data center market share gains, AI-driven demand, expanded licensing opportunities, and new product ventures that could enhance earnings per share.
In another report released today, Barclays also maintained a Buy rating on the stock with a $165.00 price target.
Based on the recent corporate insider activity of 11 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ARM in relation to earlier this year.