In a report released yesterday, Joshua Buchalter from TD Cowen maintained a Buy rating on Allegro MicroSystems (ALGM – Research Report), with a price target of $35.00.
Joshua Buchalter has given his Buy rating due to several noteworthy elements. Despite the recent downturn in the F3Q guidance, the results turned out better than anticipated, especially given the over 40% drop in shares since the previous call. The industrial weakness was expected, considering the prints of peers, but Buchalter believes that the near-term weakness in the auto sector is confined despite negative EV headlines. He finds the current levels, at less than 20x their lower numbers, to be an appealing entry point for a profitable SMIDcap growth company.
Buchalter’s rating is also influenced by Allegro MicroSystems’ performance in the auto sector, which accounts for 75% of the company’s revenue. The auto sector grew 9% Q/Q (+31% Y/Y), with e-mobility related sales making up about half of the segment sales and two-thirds of design wins. The industrial sector, on the other hand, declined 25% Q/Q (+6% Y/Y) due to softness in broad-based industrial and datacenter, as well as proactive channel management. Additionally, the EPS was $0.40, which was higher than the street’s $0.37. Buchalter is optimistic about the auto sector’s weakness being transitory and feels more comfortable given the management’s proactive steps to avoid shipping into customers’ inventory.
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Based on the recent corporate insider activity of 62 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of ALGM in relation to earlier this year.
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Allegro MicroSystems (ALGM) Company Description:
Allegro Microsystems Inc is a global designer, developer, fabless manufacturer and marketer of sensor ICs and application-specific analog power ICs enabling the important emerging technologies in the automotive and industrial markets. It is a supplier of power ICs. Its sensor ICs enable customers to precisely measure motion, speed, position and current, while its power ICs include high-temperature and high-voltage capable motor driver, power management and LED driver ICs. Its products are divided into three categories such as SENSE that include Current Sensors, Switches and Latches, Linear and Angular Position, Magnetic Speed Sensors, and Photonics; REGULATE that include Regulators, ClearPower Modules, and LED Drivers; and DRIVE that includes BLDC Drivers, Brush DC and Stepper Drivers.
Read More on ALGM:
- Allegro MicroSystems Reports Second Quarter 2024 Results
- Allegro MicroSystems Completes Acquisition of Crocus Technology to Accelerate Innovation in TMR Sensing Technology
- Allegro MicroSystems appoints Puma to its board of directors
- Allegro MicroSystems Appoints Mary Puma to its Board of Directors
- Allegro MicroSystems, BMW collaborate on high-efficiency traction inverters
