ARM
Arm Holdings plc American Depositary Shares
$306.51
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 302.3% above fair value
You pay
$306.51
Bear
$45.73
Fair
$76.18
Bull
$113.66
Bear
$45.73
-85.1%
12% stage 1 growth, 12% discount
Fair
$76.18
-75.1%
19% stage 1 growth, 12% discount
Bull
$113.66
-62.9%
25% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (19% base case)
Terminal Value % of EV
42%
Implied Market Multiple
329.9x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $192.22 from 27 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $76.18 per share.
Warnings
Wall Street's average price target is $192.22 (from 27 analysts). Our estimate is 80% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions