Arm Holdings Upgraded to Buy; Price Targets Cut to $170 on Memory Risks
New Street upgraded Arm Holdings to Buy from Neutral after Q3 royalties topped forecasts and management raised Q4 guidance. Jefferies and KeyBanc trimmed price targets to $170 from $205 and $200, respectively, maintaining positive ratings but warning that rising memory prices may curb handset royalty growth.
1. New Street Upgrade
New Street analyst Pierre Ferragu upgraded Arm Holdings to a Buy rating, raising the recommendation from Neutral. The upgrade follows Q3 royalty revenues surpassing internal forecasts and management's upward revision of Q4 guidance, highlighting sustained licensing momentum.
2. Jefferies and KeyBanc Price Target Cuts
Jefferies lowered its Arm price target to $170 from $205 while retaining a Buy rating, citing concerns that higher memory prices could slow smartphone sales volumes. KeyBanc similarly cut its target from $200 to $170 and maintained an Overweight rating despite stronger-than-expected royalties and licensing metrics.
3. Memory Price Headwinds
Analysts warn that rising memory costs and supply shortages may pressure handset royalty growth, particularly in the low-to-mid-end segment. However, Arm's expansion is driven by high-end smartphone chips leveraging v9 and CSS architectures, which could mitigate broader market headwinds.