Chip stock Arm Holdings (NASDAQ:ARM) was on track to be one of the biggest initial public offerings (IPOs) we’d seen in a long while. But ever since it went live, it’s been remarkably volatile. And now, in Friday afternoon’s trading, it’s down nearly 3%.
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New coverage from Susquehanna, via analysts Mehdi Hosseini and Chris Rolland, gave Arm Holdings a price target of $48 per share and a Hold rating. The duo dubbed Arm Holdings a “fairly valued” risk-reward combination, noting that its current strategy seems to focus on driving royalty rates up to the very limit of reason itself, while also adding on “subsystems” revenue.
Yet, Rolland and Hosseini also pointed out a serious problem for Arm Holdings. Arm’s target market is mobile devices, and that market has been lackluster for some time now. So in order to step up its valuation, it’s going to have to justify such a move by ramping up its innovation and getting into new markets. The mobile device market likely won’t come back soon, so the sooner Arm Holdings can innovate, the better chance it will likely have.
Is Arm a Good Investment?
Arm Holdings needs all the help it can get, too. Analysts are skeptical, with analyst consensus calling Arm Holdings stock a Hold on the strength of one Buy rating, one Sell, and three Holds. Further, Arm Holdings stock offers virtually no upside potential, with its average price target of $50.75 yielding just 0.06% upside potential.
