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Arm (ARM), which recently completed its initial public offering (IPO), experienced a notable boost on Monday. Notably, the firm attracted bullish assessments from major Wall Street firms as they initiated coverage of the company, citing Arm’s dominance in the smartphone market as one of the expected growth drivers.

Wall Street Sees Arm’s Stock Price Rising Up to $70 a Share

Multiple brokerage bigwigs on Wall Street opened their coverage of Arm Holdings with top ratings on Monday, citing the chipmaker’s leadership in the smartphone market and possible expansion into data centers as potential earnings growth catalysts. Arm’s shares rose 2.8% at the market open on Monday. 

Wall Street’s biggest banks, including JPMorgan and Goldman Sachs, graded Arm’s stock with “buy” or similar ratings. The moves underscore the brokerages’ confidence in the UK-based semiconductor company to grow revenue through higher royalty fees and a strong presence in cloud and automotive markets.

“We expect Arm to not only expand on its presence in the smartphone market primarily through higher royalty rates, but to also extend its reach across applications to which it is under-indexed,” Goldman Sachs strategists wrote, setting a price target of $62. 

Furthermore, other brokerages such as Citi, TD COwen, Deutsche Bank, and Mizuho also set their price objectives for ARM from $60 to $70. The most bullish was JPMorgan, which started ARM’s coverage with an “overweight” rating and a price target of $70. 

ARM’s Public Debut Ended IPO Market Drought

The spate of recommendations ended the silent period for the nearly 30 banks that underwrote Arm’s IPO in September.

The chip manufacturer raised $4.87 billion for its owner, SoftBank Group, marking the biggest public listing of 2023. From a broader perspective, the IPO’s success provided much-needed confidence to investors and companies considering going public following a nearly two-year market drought. Arm’s IPO was one of the three big September listings, with delivery company Instacart and marketing automation firm Klaviyo debuting on the US stock exchanges. 

With Arm’s shares currently trading at $55.5 a piece, the aforementioned price targets by Wall Street giants imply the stock has an upside potential of between 10% and 27%. Meanwhile, some brokerages, like HSBC, offered a more cautious coverage for Arm’s stock, saying the company’s shares may remain range-bound due to smartphone market uncertainty.

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