A Look At Allegro MicroSystems (ALGM) Valuation After Upgrade, New Sensor Launch And Earnings Beat
Morgan Stanley’s recent upgrade of Allegro MicroSystems (ALGM), paired with earnings that topped expectations, has focused attention on how the new ACS37017 current sensor and leadership changes could shape the stock’s risk reward profile.
See our latest analysis for Allegro MicroSystems.
The recent 1 day share price decline of 7.44% and 7 day share price return of negative 9.86% sit against a stronger backdrop, with a 90 day share price return of 69.25% and 1 year total shareholder return of 39.31%. This suggests momentum has been building over recent months as investors react to the ACS37017 launch, earnings beat, and Morgan Stanley’s upgrade.
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With the shares up 69.25% over 90 days and trading about 17% below the average analyst price target of US$45.08, the key question now is whether Allegro still offers upside or if the market already reflects future growth.
Most Popular Narrative: 0.5% Overvalued
Allegro MicroSystems last closed at $38.59, slightly above the most followed fair value estimate of $38.42, so the story depends on long term growth assumptions.
Industrial automation and data center markets are rebounding, with design wins and expanding content in high growth sectors (data center cooling, robotics, automation), indicating increasing demand for Allegro's advanced sensors and power ICs; this should drive higher revenues and incremental margin improvements as secular demand trends strengthen.
Want to see what is built into that fair value? The narrative focuses on rising revenue, expanding margins, and a richer future earnings multiple. Curious which assumptions really move the needle here?
Result: Fair Value of $38.42 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, heavy reliance on auto and data center cycles, along with ongoing price pressure and competition in China, could quickly challenge these optimistic growth assumptions.
Find out about the key risks to this Allegro MicroSystems narrative.
Next Steps
If this mix of optimism and caution has you weighing both sides, it makes sense to move quickly and look through the numbers yourself, starting with 1 key reward.
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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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