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Beverly Hills, CA, United States, 2014/02/10 - Laureate Trust initiated coverage on UK processor designer ARM Holdings with a 12 month target price of $60USD, citing strong trend of license growth for 2014 [LSE: ARM] [NASDAQ: ARMH] - LaureateTrust.com.
Laureate BVI has started coverage of Arm Holdings PLC with a 12 month target Price of US$60. “Arm Holdings reported disappointing sales but we believe mid-range mobile phones and computers will continue to have strong growth over the next 5-years” according to Tasca.
Laureate Trust issued a Buy recommendation on UK microchip designer Arm Holdings PLC, with target price of US$60. Laureate reports that Arm Holdings is diversifying away from the Apple (AAPL) smartphones and applying their technology towards tablets and appliances which will offset a slowdown in the high-end smartphone market.
Peter Tasca, CEO of Laureate Trust states,“We have seen a positive trend with Arm Holdings in that half their chips are used in applications that aren’t mobile devices, such as consumer electronics. Our reports show that over 2.9 billion (Arm.L) designed chips were shipped into products like digital cameras, TVs DVD players and other consumer electronics. ”
Arm Holdings chief Simon Segars stated,“Smartphones remain a very important and valuable market to ARM. So this market is going to continue to grow and continue to be profitable for ARM, despite the slowing of growth in the high-end.”
Tasca states,“ARM has positioned themselves for strong growth in 2014, we expect to see 15% -20% growth and over time we’re expecting exponential growth of low to mid-range smartphones as they become available to billions more users.”
Segars states,“The performance of the licensing and the royalty led to 15% year-on-year revenue growth and through that performance of the business, we’re able to keep investing in the business, while we increase returns to our shareholders. We’ve just announced we would increase our dividend by 27%.”
Laureate points out the only area of concern for ARM was Q4 which grew at about 7% year-on year, while the industry grew at 2% - 3%. “But the real source of growth for ARM comes from licensing revenue. Arm saw a 26% rise in licensing adding 26 new processor licenses in the quarter, covering medical devices, mobile and appliances, that is very impressive” according to Tasca.
The current year looks like the growth trend for ARM will continue, there is a healthy pipeline of licensing opportunities and the stock will reflect this growth, according to Tasca.
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