KeyBanc Lowers Arm Holdings Price Target to $170

KeyBanc analyst John Vinh lowered the price target on Arm Holdings (NASDAQ: ARM) to $170.00 (from $200.00) while maintaining an Overweight rating.

“Strong Results Given Strong Smartphone/Cloud, While Memory Expected to Temper Handset Royalty Growth; ARM posted strong F3Q (Dec) results and guided F4Q (Mar) higher as royalties and licensing beat.

Royalty growth was driven by strong smartphone demand given higher royalties from CSS adoption and Armv9 and Data Center, which is approaching 20% of royalties, with DC expected to reach 50% of royalties exiting F28/F29 and overtake handsets.

Mgt is acknowledging memory pricing/ shortages will likely impact Handset royalty growth but will be more resilient with 15-20% unit decline impacting handset royalties by 2-4%.

As such we’re adjusting F26E, lowering our F27 ests and trim PT to $170. Remain OW.”

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