ARM share price: Company receives boost from new chip announcements

ARM Holdings Plc (LON:ARM), the British chip designer, whose technology powers around 95 percent of smartphones, received a strong boost yesterday after one of its licensees announced the launch of several new processors this year based on ARM designs.

US semiconductor giant Qualcomm yesterday unveiled its new Snapdragon 620 and 618 processors, which will reach devices in the second quarter of this year. The chips are based on the ARM Cortex-A72 design, the latest technology from the UK firm, announced just a couple of weeks ago. The chips are designed to enable 4K video and faster LTE speeds in more affordable phones – priced at $300 and above. This could provide a much greater reach for ARM’s most powerful design.In addition, Qualcomm also announced new eight-core Snapdragon 425 and 415 chips, aimed at “high-volume” smartphones. These chips are based on 64-bit ARM CPU cores.

The announcements spurred optimism about ARM’s royalty revenues, helping shares in the company to rise 2.5 percent yesterday to a two-year high of 1,099p. The news “clearly represents an accelerated introduction of higher-end features in mid range processors [ . . .] which bodes favourably for Arm’s mobile royalties performance, particularly in the second half,” observed Citigroup analysts, as quoted by the Financial Times. The shares received additional support from UBS, which raised its price target on the stock to 1,200p.

In today’s trading, ARM shares have given back some of their gains from the previous session, trading 1.5 percent lower at 1,094.00p, as of 13:45 UTC. The stock has risen 9.8 percent since the start of the year, boosting the company’s market capitalisation to £15.5 billion.
According to the Financial Times, the 22 analysts offering 12 month price targets for ARM have a median target of 1,200p, with a high estimate of 1,500p and a low estimate of 700.00p. As of Feb 18, 2015, the consensus forecast amongst 35 polled investment analysts covering ARM has it that the company will outperform the market. This stance has been maintained since July 03, 2013, when the sentiment of investment analysts improved from “hold”.
As of 15:09 GMT, Thursday, 19 February, ARM Holdings plc share price is 1,094.50p.