ARM (NASDAQ:ARM) Shares Gap Up After Better-Than-Expected Earnings

Shares of ARM Holdings PLC Sponsored ADR (NASDAQ:ARM) gapped up before the market opened on Thursday following a stronger than expected earnings report. The stock had previously closed at $224.89, but opened at $258.00. ARM shares last traded at $240.2070, with a volume of 3,732,252 shares traded.

The company reported $0.45 EPS for the quarter, topping analysts’ consensus estimates of $0.40 by $0.05. The firm had revenue of $1.29 billion for the quarter, compared to analyst estimates of $1.26 billion. ARM had a return on equity of 12.43% and a net margin of 18.37%.The company’s revenue was up 22.4% on a year-over-year basis. During the same quarter last year, the company earned $0.35 EPS.

ARM News Summary

Here are the key news stories impacting ARM this week:

• Positive Sentiment: ARM reported record fiscal Q1 revenue of $1.29 billion, up 22.4% year over year, while adjusted EPS of $0.45 exceeded the $0.40 consensus estimate. ARM earnings report
• Positive Sentiment: AI demand remains a major growth driver: data-center royalty revenue reportedly doubled, and demand increased for ARM’s AI-focused and AGI CPU designs used in cloud and data-center chips. ARM earnings call highlights
• Positive Sentiment: Management’s fiscal Q2 EPS guidance of $0.43–$0.51 is above the $0.39 analyst consensus, and projected revenue is also above expectations. Needham reaffirmed a Buy rating with a $255 price target. ARM earnings and analyst rating

Analysts Set New Price Targets

A number of research analysts recently commented on the company. New Street Research raised ARM from a “neutral” rating to a “buy” rating in a research note on Thursday. Deutsche Bank Aktiengesellschaft reiterated a “hold” rating on shares of ARM in a research note on Thursday, May 7th. UBS Group reissued a “buy” rating on shares of ARM in a report on Thursday. Benchmark assumed coverage on shares of ARM in a research report on Thursday, July 16th. They issued a “hold” rating for the company. Finally, Barclays upped their price target on shares of ARM from $250.00 to $360.00 and gave the stock an “overweight” rating in a report on Monday, June 1st. Eighteen equities research analysts have rated the stock with a Buy rating, seven have given a Hold rating and one has assigned a Sell rating to the company. According to data from MarketBeat.com, ARM currently has a consensus rating of “Moderate Buy” and a consensus target price of $288.30.

Insider Activity

In other ARM news, insider William Abbey sold 10,887 shares of the business’s stock in a transaction dated Tuesday, May 19th. The stock was sold at an average price of $224.14, for a total transaction of $2,440,212.18. Following the completion of the transaction, the insider owned 43,353 shares of the company’s stock, valued at approximately $9,717,141.42. The trade was a 20.07% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. Also, CFO Jason Child sold 31,920 shares of the stock in a transaction dated Wednesday, May 20th. The stock was sold at an average price of $226.54, for a total transaction of $7,231,156.80. Following the completion of the transaction, the chief financial officer directly owned 174,232 shares of the company’s stock, valued at $39,470,517.28. This trade represents a 15.48% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders have sold 216,049 shares of company stock valued at $52,101,605.

Institutional Trading of ARM

A number of hedge funds have recently added to or reduced their stakes in ARM. Syntax Research Inc. bought a new stake in shares of ARM during the first quarter worth $30,000. Evelyn Partners Investment Management Services Ltd bought a new position in shares of ARM in the 1st quarter valued at $30,000. Mcguire Capital Advisors Inc. acquired a new stake in shares of ARM during the 4th quarter valued at $30,000. Navalign LLC bought a new stake in ARM during the 4th quarter worth $33,000. Finally, FWL Investment Management LLC bought a new stake in ARM during the 2nd quarter worth $34,000. Institutional investors and hedge funds own 7.53% of the company’s stock.

ARM Stock Performance

The business has a fifty day simple moving average of $331.09 and a 200-day simple moving average of $211.79. The firm has a market cap of $256.64 billion, a price-to-earnings ratio of 285.85, a PEG ratio of 7.61 and a beta of 3.76.

ARM Company Profile

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.