ARM Holdings plc: All the good news has been priced in say Jefferies as they retain Underperform rat |
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| Economy | |
| Written by Gary Howes | |
| Friday, 27 January 2012 | |
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Analysts say that they see investor questions revolving around an increasing Intel threat.
ARM Holdings plc (LON:ARM) shares remain range-bound on a daily basis on the FTSE 100 this afternoon. "The appeal of the ARM Holdings story is hard to deny: ubiquitous architecture, ramping handset complexity and new market penetration. Yet, we believe all of that has already been priced in. We reiterate our Underperform rating but increase our PT to 466p as we look to our new FY13e estimates," say Jefferies. Analysts say that they see investor questions revolving around an increasing Intel threat (Medfield release) and royalty levels into FY12 as end market demand may see top-line growth stall whereas chipmaker competition remains white-hot. "ARM Holdings remains a c.40x FY13e story (non-GAAP EPS FY12e 13.1p, FY13e 15.5p+) despite growth of only 10-20%. We believe ARM is currently priced for perfection – using a late cycle valuation of 30x 2013e P/E we see 466p as a more reasonable SP level. As a result, we retain our underperform rating but raise our PT to 466p. Risks include f/x rise, royalty rate ramp, and stronger industry growth (2011/12)," say Jefferies. It has been a lacklustre days trading on the FTSE 100 today. It would seem that a thin eco-news calendar has had investors at a loss with regards where to make their next move. The financial sector has faced up to a sweeping overhaul of the way it is regulated. Regulations will give greater protection to customers including those using payday lenders. The draft financial services bill makes it clear that if taxpayer funds are at risk in a crisis, the chancellor of the exchequer has the power to act unilaterally. The legislation, as widely expected, creates several bodies, including a Financial Conduct Authority to look after markets and consumer interests, but which will also have a mandate “to promote effective competition in financial services in the interests of consumers”.
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