ARM (NASDAQ:ARM) Shares Gap Up on Earnings Beat

ARM Holdings PLC Sponsored ADR (NASDAQ:ARM) shares gapped up before the market opened on Thursday after the company announced better than expected quarterly earnings. 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 changing hands.

The company reported $0.45 EPS for the quarter, beating analysts’ consensus estimates of $0.40 by $0.05. ARM had a net margin of 18.37% and a return on equity of 12.43%. The firm had revenue of $1.29 billion during the quarter, compared to analysts’ expectations of $1.26 billion. During the same quarter last year, the company posted $0.35 earnings per share. The company’s revenue for the quarter was up 22.4% compared to the same quarter last year.

Key ARM News

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

Analyst Upgrades and Downgrades

A number of equities analysts recently commented on ARM shares. Morgan Stanley reiterated an “equal weight” rating and set a $150.00 price target (up from $135.00) on shares of ARM in a report on Tuesday, April 7th. Royal Bank Of Canada upped their price objective on ARM from $175.00 to $260.00 and gave the company an “outperform” rating in a research note on Thursday, May 7th. Wells Fargo & Company restated an “overweight” rating and issued a $280.00 price target on shares of ARM in a research note on Thursday. Raymond James Financial reiterated an “outperform” rating on shares of ARM in a report on Thursday, May 7th. Finally, Guggenheim reissued a “buy” rating and issued a $255.00 price objective on shares of ARM in a research report on Thursday. Eighteen equities research analysts have rated the stock with a Buy rating, seven have issued a Hold rating and one has issued a Sell rating to the company’s stock. Based on data from MarketBeat, the company has an average rating of “Moderate Buy” and an average target price of $288.30.

Insider Transactions at ARM

In other news, CAO Laura Kathleen Bartels sold 11,306 shares of the company’s stock in a transaction that occurred on Tuesday, June 2nd. The stock was sold at an average price of $392.70, for a total value of $4,439,866.20. Following the transaction, the chief accounting officer owned 12,135 shares of the company’s stock, valued at approximately $4,765,414.50. This represents a 48.23% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. Also, CFO Jason Child sold 31,920 shares of the stock in a transaction that occurred on Wednesday, May 20th. The stock was sold at an average price of $226.54, for a total value of $7,231,156.80. Following the transaction, the chief financial officer owned 174,232 shares in the company, valued at approximately $39,470,517.28. This trade represents a 15.48% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last ninety days, insiders have sold 216,049 shares of company stock worth $52,101,605.

Institutional Inflows and Outflows

A number of institutional investors and hedge funds have recently added to or reduced their stakes in the company. Rathbones Group PLC raised its stake in ARM by 4,638.8% in the 4th quarter. Rathbones Group PLC now owns 500,043 shares of the company’s stock worth $54,660,000 after purchasing an additional 489,491 shares in the last quarter. Paragon Capital Management Inc. acquired a new position in shares of ARM during the 4th quarter worth approximately $826,000. Zurcher Kantonalbank Zurich Cantonalbank grew its position in shares of ARM by 34.7% during the 4th quarter. Zurcher Kantonalbank Zurich Cantonalbank now owns 24,188 shares of the company’s stock worth $2,644,000 after purchasing an additional 6,232 shares in the last quarter. Partners Group Holding AG bought a new position in shares of ARM during the fourth quarter worth approximately $798,000. Finally, Mirae Asset Global Investments Co. Ltd. increased its holdings in shares of ARM by 13.5% during the fourth quarter. Mirae Asset Global Investments Co. Ltd. now owns 417,775 shares of the company’s stock worth $45,667,000 after purchasing an additional 49,811 shares during the period. 7.53% of the stock is owned by institutional investors and hedge funds.

ARM Stock Up 6.8%

The company’s fifty day moving average price is $331.09 and its 200 day moving average price is $211.79. The company has a market capitalization of $256.64 billion, a P/E ratio of 285.85, a PEG ratio of 7.61 and a beta of 3.76.

About ARM

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.