ARM Holdings Share Discussion Threads

[mike740] 16/9/2015 13:59

One paragraph in the overnight market report …..

While Arm tends to be viewed as a difficult takeover target because its licensing model depends on customer neutrality, investors have speculated that Arm’s dominant market share might make it a strategic asset to China, which has been looking at acquisitions to help establish its own chip manufacturing base.

[urgentclick] 16/9/2015 12:26

It's a no-brainer to hold when the company will improve, yet the stock price is down around 20% from the highs of the past year. So logic tells us that the target price is 1200 + 20% or whatever

[mike740] 16/9/2015 11:27

Morgan Stanley note........

On the longer-term 2020 targets, ARM is increasing its plan to gain market
share in networking infrastructure (45% vs 30-35% previously) and servers
(25% vs 20% – we model 12%). This is based on management’s discussions
with current customers (chip partners and OEM) who are willing to accelerate
the deployment of new generation IP networks (SDN, NFV). Moreover, ARM
management has reinforced ambitions in the Internet of Things and the two
acquisitions it has made this year in Bluetooth and Embedded
Security/Cryptography could generate $20m of revenues in 2016. The bears
are likely to remain cautious about the even more ambitious targets in servers
and networks but our phone call with ARM this morning shows that the
discussions with its customers (chip makers and OEMs) are at an advanced
stage.
ARM is also planning to add R&D investment to support further market share
gains – to the tune of $40m in 2016 and $60m in 2017. With Internet of Things
acquisitions generating about $20m and $40m in 2016 and 2017, we believe
the increased R&D spend will not have much impact medium term vs EBIT of
$1bn.
More interestingly, ARM is targeting $200m incremental revenues from those
initiatives in 2020, or 8% of incremental revenues vs MSe, and up to 10%
incremental EBIT vs MSe. This is supportive to our “compounding growth”
thesis on ARM, whereby every 1% of additional growth adds value to
shareholders in the long-term.

[mike740] 16/9/2015 11:26

CAZ broker note.......

Though the new investment plan announced by ARM is dilutive in the
short term, we consider it positive in the mid term as ARM finds new
opportunities for long term revenue growth. The company is maintaining
quarterly guidance. In our opinion the stock may not break out till
company acknowledges negative impact of ongoing semi inventory
correction though after that it will benefit from restocking rebound.

[mike740] 16/9/2015 11:23

UBS broker note on ARM.....

Ahead of its analyst day (930am UK), ARM published a press release detailing one of
the key messages of the day – increased investment in R&D designed to accelerate
market share in critical areas and provide incremental revenue. While traditional
financial economic theory encourages investment in a business generating returns
significantly above its cost of capital (2014 UBSe ARM RoiC 29% vs a CoC of 9%), it
will be essential that ARM management convinces investors in the surety of the revenue
it will generate from this investment given the company has at times invested more for
limited tangible benefit (Linaro investment, MIPs IPR) despite realising strong intangible
rewards. We expect management to provide comfort and reiterate our Buy.


ARM cites that it will ramp its P&L costs by £40m/annum for 2017 (c.6% of UBSe
current EBIT forecast for FY17E assuming no revenue contribution) with growth in this
cost growing more modestly beyond ’17. For this ARM expects to add c.$40m of
revenue in ’16 rising to $200m in 2020. We believe part of both revenue and
investment relates to ARM’s recent acquisitions (Sansa, Sunrise, Wicentric). ARM
believes this new phase is expected to be EPS accretive from 2017. If we apply a linear
revenue progression and our current gross margin assumption for ’17E, this would
imply a c.1.5% enhancement to FY’17 EBIT rising to a c.7% benefit for 2020E.


ARM cites investment in providing incremental revenue from Networking, Servers and
IoT as well as investment in mobile devices. For reference ARM has historically targeted
market shares of 30-35% in Networking (in a $18bn total chip market) and 20% share
in Servers for 2020 (in a $7bn market).


In addition to the investment announcement, ARM announced that current
trading/opex for Q3 are consistent with its prior outlook (and where UBSe/consensus
currently sits) which given concerns around the smart-phone market should provide
relief. Our DCF based price target remains 1,160p (WACC 9%, g 2%). ARM trades on
27.8x P/E ’16E versus its 1 year forward historic average of 30x.</>

[mike740] 16/9/2015 11:11

ARM share price rises after sales of new Apple iPhone 6S and Morgan Stanley note
16 September 2015 2:01am
by Joseph Millis

The share rise was helped by strong first-weekend Apple iPhone sales

Chipmaker Arm Holdings yesterday saw its share price rise almost 3.5 per cent, helped by news of strong first-weekend Apple iPhone sales, and by recommendations from brokers including Morgan Stanley.

Yesterday was the the first analyst day for new chief financial officer Chris Kennedy, who was poached from easyJet.

Morgan Stanley noted that ARM has a strong balance sheet with £904m in cash and freecash flow yield growing from 3.5 per cent in 2016 to six per cent in 2020.

It said: “[We] believe there is plenty of room for more returns at ARM, given the relative immunity to the semis [semiconductor] cycle. It may be too early for the new CFO to announce a less cautious capital return plan, but we expect the subject to be raised.”

hxxp://www.cityam.com/224421/arm-shares-rise-after-sales-new-iphone-and-morgan-stanley-note

[binladin] 16/9/2015 10:43

HP cutting 30000 jobs shows the trend in the computer and printer market..
Not many people are buying Hp

[philanderer] 15/9/2015 23:44

ARM Holdings Receives a Buy from Canaccord Genuity


In a report released today, Matt Ramsay from Canaccord Genuity reiterated a Buy rating on ARM Holdings (NASDAQ: ARMH), with a price target of $60. The company’s shares opened today at $45.04.

Ramsay commented, “We attended ARM’s analyst day in London and left still confident in our long-term thesis which includes ARMv8 64-bit mobile ubiquity, steady unit share growth in both server and more importantly enterprise networking, and long-term operating leverage potential.

Overall, while the 2015 smartphone macro environment has been tough, management reiterated Q3/15 guidance given strong penetration of higher royalty ARMv8 chips broadly and Mali share gains at key customers offsetting much of the lower unit growth. slightly reduced mobile 5-year mobile royalty CAGR should not surprise investors, and incremental investments in networking and server markets show management’s increased confidence.

Further, we remain confident in upside to 2016 consensus royalty growth estimates as ARMv8 chips penetrate the mid- and low-tier and believe this mobile royalty growth will dovetail into ARM enterprise networking growth in 2017-20. We reiterate our BUY rating, particularly in light of the recent pullback in the sector, and our $60 price target.

Slightly lower mobile device royalty growth targets: Management lowered mobile device unit forecasts from 10% (2013-18) to 7% (2014-20), but these new numbers now include the shrinking PC market and still include tablets with minimal growth.

Management expects smartphone royalties to double by 2020 (~15% CAGR) through near ubiquitous penetration of higher royalty ARMv8 64-bit chips (@50% exiting 2015, @ 90% exiting 2016), Mali share gains, and much broader adoption of 8-core chips (20% now growing to 50% exiting 2016).”

[philanderer] 15/9/2015 14:14

UBS and Morgan Stanley on todays news ...Investment into IoT, servers, etc

[philanderer] 15/9/2015 13:12

Guardian market report:


But for the second day running, chip designer Arm is outperforming. On Monday it was lifted by hopes of a good performance from key customer Apple - confirmed when the US group revealed positive sales figures for its new iPhone products.

Now Arm has climbed another 2p to 950p as it announced an increase in investment in technologies for networks and servers to gain a greater than forecast market share. It is also boosting spending on the so-called Internet of Things. Ahead of an investor day, It said the new investments would mean additional costs during next year, growing to £40m by 2017 as it hired more engineers and technical marketing staff.

But it would add $40m to revenues in 2016, rising to $200m in 2020, and would be earnings per share accretive by 2017.

It said third quarter trading and normal operating expenses were in line with its comments at the second quarter announcement in July. Investec issued a buy note, with analyst Julian Yates saying:

Arm has made a surprise announcement ahead of its investor day, signalling it will increase operating expenses to drive additional sales. On a near term view, this news could limit stock price performance as it will cap 2016 estimated earnings per share momentum. However, if the company can successfully justify its confidence in the additional sales growth which the opex investment should drive, this will ultimately increase the longer term value of the business. Our investment view on Arm is based on our positive long term view and for now we retain our 1140p 2020 estimated royalty- driven target price.

[philanderer] 15/9/2015 13:06

Couple ;-)

15 Sep 15 Berenberg Buy tp 1350p
15 Sep 15 Investec Buy tp 1140p

reiterations

[albo] 15/9/2015 11:42

Hopefully get some positive broker comments today/tomorrow based on investor day briefing.

[philanderer] 15/9/2015 11:07

14 Sep 15 Berenberg Buy tp 1350p

reiterates

[philanderer] 14/9/2015 14:08

Apple Says IPhone on Pace to Beat Last Year's First Weekend

[philanderer] 14/9/2015 10:06

Analyst Investor Day tomorrow.

[philanderer] 14/9/2015 09:57

Good start to the week.


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[philanderer] 11/9/2015 15:34

Investment analysts at Macquarie assumed coverage on shares of ARM Holdings plc (NASDAQ:ARMH) in a report released on Friday, The brokerage set an “outperform221; rating on the chip maker’s stock.

[philanderer] 11/9/2015 09:39

Thanks albo , sorry about that .

[albo] 11/9/2015 09:10

Phil,
The second RNS was for another director buy AS WELL AS a correction to the price in the first director buy.

[philanderer] 10/9/2015 18:25

albo , I think it`s just a correction to yesterdays trade. The trade price was released as 9.48p yesterday and corrected today to 948p per share

[albo] 10/9/2015 16:37

And now another non-exec following on.