When analysts wax bullish about stocks, investors often sit up and take notice. That's exactly what's happening today with respect to Arm Holdings (ARM +4.65%) stock. Shares of the semiconductor stock are jumping higher today after UBS provided a more auspicious outlook.
As of 3:32 p.m. ET, shares of Arm are up 4%, having retreated slightly from their earlier gain of 7.3%.
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UBS touts the tension regarding tariffs is tapering off
Keeping a buy rating, UBS raised its price target on Arm stock to $200 from $175. The firm predicates this rosier outlook on the recognition that how tariffs may affect the smartphone supply chain are softening, according to The Fly.
NASDAQ: ARM
Key Data Points
Of the various products in which Arm's semiconductors are found, smartphones are one of the most reliant technologies on Arm's chips. The company estimates that 99% of smartphones, for example, include Arm's components.
Based on Arm stock's closing price of $170.68 on Friday, the $200 price target from UBS implies upside of 17.2%.
Arm stock will cost you an arm and a leg
Before tech investors leap at the opportunity to buy Arm stock, it's important to recognize a couple of things. For one, analysts often have shorter investing horizons than the multiyear holding periods that The Motley Fool favors, so it's best to take the $200 price target from UBS with a grain of salt.
Secondly, Arm stock is hardly a bargain. Trading at about 263 times trailing earnings, shares of Arm are richly valued right now. Consequently, investors looking for semiconductor stocks -- and who are interested in more reasonable valuations -- may want to look elsewhere, or consider a semiconductor exchange-traded fund.
