Arm Holdings flat even as Wall Street banks start coverage on British chip firm
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Arm Holdings (NASDAQ:ARM) shares were hugging the flatline on Monday as 10 Wall Street firms, including J.P. Morgan, started coverage on the British chip design firm.
J.P. Morgan analyst Harlan Sur, who also put a $70 price target on Arm, said the company has near 100% market share in smartphones, with Apple (AAPL) and Android (GOOG) (GOOGL) devices using Arm architecture, but the company is focusing on getting more intellectual property into total compute platforms, including integrated CPUs, GPUs, networking and memory, along with memory. 
Companies such as AMD (AMD), Nvidia (NVDA), Qualcomm (QCOM) and others use Arm architecture.
"We see Arm driving an 18%+ revenue [compound annual growth rate] (40% EPS CAGR) for the next three years on higher IP content (driving higher royalty rates), market share gains against proprietary/legacy compute architectures, and ARM's growing market penetration into the highest growth segments of the market like auto, IoT, and datacenter compute," Sur wrote in an investor note. 
"The team has 90%+ visibility on customer chip design programs and therefore two- to three-year visibility on royalty rates/per chip, which, combined with three-year visibility on its licensing business, drives strong predictability on its total revenue profile," Sur added. 
Sur said the stock should approach the $70 price target over the next nine to 12 months as the company continues to execute and there is the positive to deliver upside to consensus estimates.
Mizuho Securities analyst Vijay Rakesh started Arm (ARM) with a buy and $62 price target, stating that the expected outperformance is due to the company's leadership position in smartphones, as well as its "unique" positioning in other areas like artificial intelligence, flexibility, chip disaggregation and higher royalty rates.
Bank of America analyst Vivek Arya also started Arm (ARM) with a buy rating and $65 price target, noting that it expects "industry-leading" sales growth of 19% and 43% compound annual growth from 2022 to 2025, or one and a half times faster than its peers, thanks to higher royalty rates and the ability to leverage "solid" relationships with companies like Amazon (AMZN), Nvidia (NVDA) and others to boost its cloud server CPU market share against companies like Intel (INTC) and AMD (AMD).
TD Cowen, Wolfe Research, Goldman Sachs, Deutsche Bank, Citi, BMO Capital Markets and Guggenheim also weighed in on Arm.

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