A week ago, Arm Holdings plc (NASDAQ:ARM) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 3.3% to hit US$939m. Arm Holdings reported statutory earnings per share (EPS) US$0.21, which was a notable 19% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, the most recent consensus for Arm Holdings from 31 analysts is for revenues of US$3.98b in 2025. If met, it would imply a solid 14% increase on its revenue over the past 12 months. Per-share earnings are expected to jump 111% to US$0.86. Before this earnings report, the analysts had been forecasting revenues of US$4.00b and earnings per share (EPS) of US$0.86 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 7.5% to US$134. It looks as though they previously had some doubts over whether the business would live up to their expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Arm Holdings at US$200 per share, while the most bearish prices it at US$66.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Arm Holdings' revenue growth is expected to slow, with the forecast 19% annualised growth rate until the end of 2025 being well below the historical 31% growth over the last year. Compare this to the 113 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it looks like Arm Holdings is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Arm Holdings going out to 2027, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for Arm Holdings you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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