Rosenblatt lifts ARM price target; strong royalty trends

Investing.com - Arm Holdings (NASDAQ:ARM) ADRs have been in demand since its listing last September, and Rosenblatt sees even more upside, lifting its 12-month price target.

 The brokerage went to Cambridge in England to meet the company’s management, recently and came away “with increased conviction that royalty trends are richening at a faster clip on the heels of more strategic licensing engagements that are increasingly AI-centric.”

“We see double-digit rates, up from the current mid-single digits hitting the model by the end of decade (up from our previous assumption of early next decade), shifting the model aggressively to over 80% royalties,” Rosenblatt said, in a note dated Feb. 26.

Rosenblatt lifted its 12-month ADR price target to $180 from $140, while keeping its ‘buy’ rating. 

The ADRs closed Friday at $133.34, up over 77% year-to-date.

 “Like Nvidia (NASDAQ:NVDA) in compute GPUs, Arm’s technology is becoming indispensable and more so as AI moves more and more to the Edge,” the brokerage said.

Additionally, ARM’s compute subsystem (CSS) program is becoming incredibly successful, as it shaves off as much as a year from engagement to silicon. Time-to- silicon has become a crucial dynamic on AI accelerated schedules, Rosenblatt added.