🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

Arm shares gain after Wall Street brokerages begin coverage with "Buy" ratings

Published 2023-10-09, 09:58 a/m
© Reuters
USD/JPY
-

Investing.com -- Shares in Arm Holdings (NASDAQ:ARM) edged higher in early trading on Wall Street as investors weighed a series of top ratings of the chip designer from several major brokerages.

The recommendations brought an end to a customary quiet period for Arm's underwriters following its highly-anticipated initial public offering last month, which garnered $4.87 billion for the company's owner SoftBank (TYO:9984) in the largest listing so far this year.

Arm, which holds a near-monopoly in terms of share of the lucrative smartphone market, has been hit by a recent downturn in demand for the devices.

But in notes to clients, a raft of key brokerages initiated their coverage of Arm with "Buy" or equivalent ratings, citing optimism around the firm's plans to generate revenue through elevated royalty fees and focus on building its presence in cloud and automotive markets.

"We believe these strategic shifts and the higher royalty rates they can command should accelerate the company's revenue growth and further expand the valuation premium at which the company historically traded, based on the uniqueness and ubiquity of its technology ecosystem as well as the highly profitable and predictable nature of its business model," analysts at Deutsche Bank (ETR:DBKGn) said, giving Arm a "Buy" rating and a price target of $60.

Goldman Sachs (NYSE:GS), who set a price target of $62, also predicted that Arm would continue to bolster its smartphone dominance through the increased royalties.

Other analysts at Citi, Mizuho and TD (TSX:TD) Cowen also delivered price targets of between $60 to $70, with JPMorgan (NYSE:JPM) taking the most bullish view.

Arm shares, which debuted at a price of $51, were exchanging hands at $55.01 as of 09:50 ET (13:50 GMT).

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.