New Street downgrades Arm to Neutral, sees 26% downside

As previously reported, New Street downgraded Arm to Neutral from Buy with a $110 one-year price target, which represents 26% downside versus the stock’s current price of $146. The firm expects EBIT of $3.8B in FY28, which it notes is 5% above consensus expectations, but “even with a generous 40x multiple on our above-consensus expectations,” the firm doesn’t see a rationale to buy Arm above $110, the analyst tells investors in a research note. Arm “at the top of its game should trade on 35-40x FY28 EBIT in 2027, but the stock is “already past that,” added the analyst, who sees an “unattractive risk reward” at current levels.