Broker snap: Nomura ups target for ARM, but sees no catalyst

LONDON (ShareCast) - Nomura has raised its target price from 570p to 580p for chip designer ARM Holdings (LSE: ARM.L - news) but maintained its neutral view of the stock, saying that while the fourth quarter is expected to be 'in-line', there is no real catalyst in the short-term. The broker says its sees come potential downside risk in the short-term as a result from a macro slowdown and competitive threats "but do not find sufficient reasons to raise strong concerns." In regards to the fourth quarter statement, Nomura said that ARM's management is "likely to be upbeat on ARM's prospects of share gains in broadening end markets, which are unfortunately unlikely to get the market too excited," the broker said. "We expect to see some volatility in the stock but with no underlying direction unless further solid data points on any of the above emerge." However, in the long-term, the broker says its remains encouraged by the opportunities arising from notebooks and servers. However, visibility is still too poor to justify share gains beyond what the stock is effectively pricing, Nomura added. The new 580p target price is based on a top-line average increase of 14.6% between 2010 and 2015 and a long-term revenue growth rate of 10%. ARM was one of the best performers on the FTSE 100 (Euronext: VFTSE.NX - news) on Monday morning, trading 1.26% higher at 603.5p by 09:50. BC