Evercore Group Feels Confident in ARM Following Dinner with VP of Investor Relations

In a report published Tuesday, Evercore Group analyst Patrick Wang reiterated an Overweight rating and $64.00 price target on ARM (NASDAQ: ARMH).

In the report, Evercore Group noted, “We remain confident in ARM's near-term trends despite increasing concern of a possible inventory correction. We're likely to hear of some headwinds when TSMC reports next Thurs (1am ET). While royalty revenues correlate with industry chip production, ARM's robust licensing activity may offset potential weakness. Royalty rates should expand throughout the year, particularly in 2H14. Tailwinds from v8, big.LITTLE, Mali, PIPD could ultimately drive AP royalties up to 4% to 5%. In comparison, we estimate overall blended royalties at c.1.2% last year. Investors may be under-estimating the positive impact of low-end smartphone / tablet growth in China. While ASPs may be lower, units are meaningful and royalty rates richer as local chip design houses license more IP to accelerate their design time / time to market.”

ARM Holdings closed on Tuesday at $53.30.