Chip maker ARM Holdings on Tuesday releases its second quarter results which are set to meet expectations.
Consensus estimates are for revenue to $305m, up from $264m a year earlier. Earnings before interest and tax (EBIT) are forecast to rise to £89m from £83m previously.
"While second quarter results should meet expectations, the second half outlook may disappoint," said Numis.
"Ahead of the results, we downgrade royalty estimates again on indications from Samsung and others of sustained softness in the smartphone/tablet markets at both the high and the low ends."
The broker forecasts 11% year-on-year growth in Processor division royalties for the full-year 2014, well below consensus at a 17% rise and ARM's guidance at 19% growth.
Numis added that continued outperformance on licensing may offset the shortfall. However, combined with foreign exchange
headwinds, "we still downgrade earnings per share by 3%/5% in full year 2014/15 respectively".
"The long term story remains in-tact, albeit somewhat priced in and the stock tends to underperform in the short term on negative earnings momentum."
Following the earnings session, attention will turn to the release of the US inflation report, which is expected to show consumer prices rose by 2.1% year-on-year in June.
Separately in the US, existing home sales data is due. Analysts predict sales increased 2% in June compared to May when it climbed 4.9%.
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