Piper Sandler Initiates Arm at Overweight, $320 PT
Piper Sandler analyst David O’Connor initiates coverage on Arm Holdings (NASDAQ: ARM) with a Overweight rating, PT $320.
“ARM is dominant in CPU IP with 50% market share of its target markets, and its IP revenues are forecast to grow at a ~20% CAGR to ~$12B by FY31E.
On top of this, ARM is expanding into the silicon chip business, with its AGI CPU chip ramping at Meta and OpenAI from CY27E and $15B revenues targeted by FY31E.
While much of this is discounted in the current share price, we think there is upside to shares from ARM’s next voyage into the Accelerator IP business.
Although stock is expensive, we like the Accelerator IP story where ~10% ASIC share could double company’s current earnings. We value the stock on FY31E SOTP EV/EBIT and set our PT to $320.”
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