RBC Capital Lowers Arm Holdings Price Target to $130

RBC Capital analyst Srini Pajjuri lowered the price target on Arm Holdings (NASDAQ: ARM) to $130.00 (from $140.00) while maintaining an Outperform rating.

“Data Center/CSS Helping Offset Smartphone Memory Headwinds; ARM’s results and outlook were a bit better.

While slower FQ4 royalty growth outlook is likely impacting the stock in the aftermarket, management sounded confident about sustaining 20% growth in FY27.

Data Center revenue more than doubled y/y and ASP tailwinds from v9/ CSS are helping offset weaker smartphone unit growth.

Licensing grew 25% (up 18% ex-Softbank) and management believes Softbank contribution is durable.

While the uncertainty regarding chiplet/SoC strategy remains, management plans to provide further details on March 24.

We believe premium valuation is justified given ~20% royalty growth, Data Center gains, and strong ASP tailwinds. Reiterate Outperform.”

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