Morgan Stanley upgraded ARM to "overweight"
Shares of chipmaker Arm Holdings (NASDAQ:ARM) are 2.7% higher in premarket trading, following a bull note at Morgan Stanley. The analyst upgraded ARM to "overweight" from "equal weight" and lifted its price target from $107 to $190 -- a nearly 20% premium to last night's close -- after saying the company's products are instrumental to the successful rollout of edge artificial intelligence (AI).
Since going public in September 2023, Arm stock has flourished on the charts. The equity has not only doubled in 2024, boasting a 110.7% year-to-date return, but it's also added 218.3% over the last nine months. ARM's gains accelerated after joining the Nasdaq-100 (NDX) in June, and it snagged an all-time high of $188.75 on July 9.
Despite the shares' outperformance, some analysts are still on the fence. Fourteen covering brokerages rate Arm stock a "strong buy," eight recommend a tepid "hold," and one sports a "strong sell" rating. Furthermore, the average 12-month target price of $123.90 is a 24% discount to last night's close. This implies the security could see more upgrades and/or price-target hikes soon.
Keep an eye on short interest, as it's jumped 28% over the last month, and the 12.89 million shares sold short represent 10.3% of ARM's total available float. Plus, the stock's Schaeffer's Volatility Scorecard (SVS) of 86 out of 100, showing that it exceeded option traders' volatility expectations over the last year.