Arm Holdings plc
Arm Holdings plc (NASDAQ: ARM) is a semiconductor intellectual property (IP) company. The Company develops and licenses IP for various devices worldwide, and it provides development tools that accelerate product development, from sensors to smartphones to servers. Its central processing unit (CPUs) and nomenclature for properties and units (NPUs) include Cortex-A, Cortex-M, Cortex-R, Neoverse, Ethos and SecurCore.
Recent Financial and Business Updates:
- Arm Holdings plc has disclosed that it intends to release its financial results for the fourth quarter of fiscal year 2024 on Wednesday, May 8, 2024, after the closure of the market. Concurrently, the company has scheduled a conference call via audio webcast, which is slated to commence at 14:00 Pacific Time (17:00 Eastern Time / 22:00 British Summer Time), with the purpose of reviewing its financial performance and providing insights into its business outlook.
- Unveiling Quarterly Triumphs: In the latest quarterly report for Fiscal Year Ending 2024, Arm Holdings showcased remarkable financial achievements, delineating a narrative of substantial growth and strategic prowess. From soaring revenues to burgeoning royalty streams, the period underscored the company's resilience and adaptability in a dynamic market landscape.
- Stellar Revenue Surge: Total revenues surged to an unprecedented USD 824 million, marking a commendable 14% uptick from the previous year's corresponding period. This surge, fueled by record-breaking royalty figures and robust licensing revenue, showcased Arm's steadfast trajectory amidst evolving industry dynamics.
- Royalty Renaissance: Royalty revenue emerged as a cornerstone of Arm's financial narrative, with figures soaring to USD 470 million, reflecting an impressive 11% year-over-year escalation. The resurgence in the smartphone market, coupled with the pervasive adoption of Armv9 architecture, served as catalysts for this growth, underlining Arm's pivotal role in shaping technological ecosystems.
- Licensing Elevation: The quarter witnessed a notable uptick in license and other revenue streams, totaling USD 354 million, an 18% increase year-over-year. This surge, surpassing initial projections, stemmed from the execution of high-value, long-term license agreements with industry leaders, reaffirming Arm's status as a preferred partner in the technology domain.
- Fortified Contract Value: Annualized contract value (ACV) surged to USD 1,160 million by the quarter's close, marking a significant 15% year-over-year escalation. This milestone, bolstered by strategic license agreements, including Arm Total Access agreements, underscored the company's ability to cultivate enduring partnerships and drive sustained value creation.
- Operational Excellence and Financial Fortitude: The quarter exemplified Arm's commitment to operational excellence and financial fortitude, evidenced by robust gross profit margins and burgeoning free cash flows. With a gross profit of USD 788 million and a non-GAAP gross margin of 96.7%, Arm demonstrated unwavering efficiency in resource allocation and cost management. Moreover, non-GAAP free cash flow surged to USD 251 million for the quarter, reflecting a remarkable 63% year-over-year increase, further solidifying the company's financial foundation.
Technical Observation (on the daily chart)
Presently, the stock has corrected by approximately 43.86% since reaching its highest point in the past 52 weeks, which occurred on February 12, 2024. The Relative Strength Index (RSI) over a 14-day period stands at 29.59, inside the oversold zone, indicating a state of potential consolidation or a short-term upward momentum. Additionally, the stock's current positioning is below the 50-day Simple Moving Average (SMA), which may serve as dynamic short-term resistance level. Furthermore, the price is currently near an important support zone of USD 80.00 -USD 90.00.
As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to Arm Holdings plc (NASDAQ: ARM) at the current market price of USD 91.33 as of April 22, 2024, at 06:55 am PDT.
Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
How to Read the Charts?
The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.
The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.
The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.
The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Abbreviations
CMP: Current Market Price
SMA: Simple Moving Average
RSI: Relative Strength Index
USD: United States dollar
Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is April 22, 2024. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.
Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’