Analysts have increased their price target for Allegro MicroSystems from $36.75 to $38.58, citing expectations of stronger revenue growth and profit margins. This outlook is supported by robust automotive and data center demand.
Analyst Commentary
Following recent research notes and changes to price targets, analysts have provided additional insight into Allegro MicroSystems' outlook and its position within the industry.
Bullish Takeaways
- Bullish analysts point to the company’s strong positioning within the automotive and data center sectors, which are experiencing sustained demand and growth cycles.
- The firm is expected to exceed its growth model projections, signaling robust operational execution and expansion opportunities.
- A restocking cycle is anticipated to provide an additional boost to revenue streams. This could further support margin improvement over the coming quarters.
- Raising the price target reflects increased confidence in Allegro MicroSystems' valuation potential and its ability to capture market share in expanding sectors.
Bearish Takeaways
- Bearish analysts remain cautious about the sustainability of current growth trends. They note that overreliance on cyclical markets like automotive and data centers could introduce volatility.
- There is a potential risk that the anticipated restocking cycle may not sustain elevated demand levels in the long term.
- Execution risks exist as the company seeks to expand into new markets and capitalize on emerging opportunities. These raise questions about scalability and consistent margin performance.
What's in the News
- Allegro MicroSystems issued new earnings guidance for Q3 ending December 26, 2025, projecting total net sales between $215 million and $225 million. This implies 24% year-over-year net sales growth. (Key Developments)
- The company launched the ACS37100, the industry's first commercially available magnetic current sensor with a 10 MHz bandwidth. The sensor features advanced XtremeSense TMR technology and targets electric vehicles, clean energy systems, and AI data center power supplies. (Key Developments)
- The ACS37100 sensor delivers a fast 50 ns response time and exceptionally low noise performance. It is designed to help system designers maximize power density, control, and efficiency for high-frequency applications. (Key Developments)
Valuation Changes
- Consensus Analyst Price Target has risen from $36.75 to $38.58, reflecting a modest increase in fair value expectations.
- Discount Rate has edged higher from 10.32% to 10.78%, indicating a slightly higher required rate of return.
- Revenue Growth expectations have increased from 17.23% to 18.68% year-over-year.
- Net Profit Margin projections have improved from 20.29% to 21.64%.
- Future P/E ratio has decreased from 37.26x to 34.57x, suggesting a lower valuation multiple on forecasted earnings.
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