Shares of chip designer Arm Holdings (NASDAQ:ARM) fell 4% at the time of writing. This can be attributed to a report from Redburn Atlantic, where analyst Timm Schulze-Melander is not very confident about the company’s future and wants to see stronger earnings in Fiscal Year 2023. As a result, he assigned a Hold rating on the stock with a price target of $50 per share while closely monitoring the v9 ISA royalty rates and Compute Subsystem licenses.
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Schulze-Melander noted that Arm is making big changes to how it usually does business, especially with how quickly it wants to change its royalty rates. He thinks the new opportunities in Compute Subsystems and v9 ISA royalty areas are good signs, but they won’t immediately make the company a lot more money. Furthermore, the analyst notes that the true challenge will be how Arm manages the next few quarters, as its choices made during this time will significantly influence the firm’s profitability in the next ten years.
Why is ARM Stock Down?
Arm stock is down today as Wall Street appears to have more modest expectations than the current share price suggests. Indeed, analysts have a Hold consensus rating based on one Buy, two Holds, and one Sell. In addition, its average price target of $51.67 per share implies 6.5% downside risk.
