FILE PHOTO: A smartphone with a displayed Arm Ltd logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File PhotoBig Wall Street brokerages, including J.P.Morgan and Goldman Sachs, started coverage of Arm Holdings with their top ratings a month after its blockbuster market debut, expecting the chip designer to deliver strong revenue and earnings growth.
The IPO had 30 underwriters, all of whom had to wait until Oct. 9 to start coverage as required by industry practice. J.P.Morgan analyst Harlan Sur expects Arm to record more than 18 per cent revenue and 40 per cent earnings per share compounded annual growth rate for the next three years on higher intellectual property content and market share gains.
Deutsche Bank, which also rates the stock a"buy", said Arm's revenue growth should accelerate due to"idiosyncratic" drivers such as higher royalty rates and market share gains.HSBC, however, was more cautious, assigning the stock a"hold" rating, citing Arm's relatively high exposure to the mature smartphone end-market and their expectations that the stock will remain range-bound.