Arm initiated with a Neutral at Susquehanna

Susquehanna initiated coverage of Arm Holdings with a Neutral rating and $48 price target. The analyst sees the stock as having a fairly valued risk/reward. The company’s largest end-market, mobile handsets, is past unit growth, while its second largest, microcontrollers, has begun to reach market share saturation, the analyst tells investors in a research note. To achieve higher levels of growth in these areas, Susquehanna worries that ARM forces royalty rate expansion, ultimately incentivizing customers to explore alternatives.