23rd April 2014
The Share Centre has advised investors to ‘hold’ the shares of ARM Holdings rather than upgrade the firm to buy despite positive first quarter revenues.
Helal Miah, investment research analyst at The Share Centre says: “ARM Holdings reported Q1 revenues of $305.2m, up 16%, compared to the same period last year. However, the strength of the sterling has once again impacted figures, a reoccurring theme for large caps. When converted revenues stood at £186.7m, up just 10%. Profit for the quarter was up 20% to £62.3m.
“Investors will be pleased to hear there were 26 processor licenses signed across a range of areas during the period and improved technology is enabling a higher royalty percentage per chip in consumer and enterprise devices. However, while licensing revenues on the whole were strong, royalty revenues were down 5%, mainly due to the currency effect. The company also saw an improvement in the number of ARM based chips that were shipped, 2.9 billion year-on-year.
“We continue to recommend investors ‘hold’ ARM Holdings. There is a lot of uncertainty in the technology sector at the moment and the shares trade at a rather lofty P/E ratio of 40 times.”