Guggenheim Reiterates Buy Rating on Arm Holdings

Guggenheim analyst John DiFucci reiterated a Buy rating and $201.00 price target on Arm Holdings (NASDAQ: ARM).

“Arm reported strong F3Q results, exceeding across all metrics, other than cash flow that has been volatile since the company came public (we believe related to SBC and taxes, etc.), but we believe will become more predictable over time.

F4Q Guidance exceeded consensus estimates across all metrics, with revenue growth moderating against a very difficult comp.

F3Q results and F4Q guide are benefiting from the core smartphone market with higher value-add products (read higher royalties per unit), along with datacenter strength that saw royalties double.

Although the smartphone volumes may decline next year, higher royalties/unit should dampen any effect and while datacenter is a smaller business, it’s tremendous growth should also help to offset this.

The stock was down 7% after hours likely on the anticipated potential dip in smartphone industry units next year.

In addition, there’s been obvious investor concern in the technology space regarding AI, especially how it will affect the Software space.

While it’s probably too early for the “shoot first and ask questions later” approach to investing, we believe three companies in our coverage universe will see clear benefits from this important technology advancement: ORCL, MSFT, and ARM.

We believe this will become apparent over time and will be reflected in the shares of ARM. We remain Buy rated with a $201 Price Target.”

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