"Although we recognize the strength of the company's right to make money on a wide and growing addressable market, we believe the recent stock price reflects too-optimistic assumptions in the dimensioning of ARM's addressable market and a misunderstanding of the company's potential in desktops, laptops and servers," he writes in a research note. "We therefore recommend investors involved to start lowering positions in the name now. We see better opportunities to go short in 12-18 months, after the announcement of first commercialised laptops and servers based on ARM. For now, a lack of catalysts may keep the stock performing in line with the market, although signs of overheating in the semi value chain are worth monitoring carefully."
Despite the bearish commentary, ARMH is up 58 cents, or 2.1%, to $28.60.