Morgan Stanley Upgrades Allegro to Overweight with $51 Price Target
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy ALGM?
Source: seekingalpha
- Rating Upgrade: Morgan Stanley upgraded Allegro MicroSystems from Equal-weight to Overweight and raised the price target from $45 to $51, reflecting confidence in the company's future growth potential.
- Automotive Semiconductor Growth: Analysts noted that Allegro's increasing semiconductor content in Battery Electric Vehicles and Internal Combustion Engine platforms is expected to drive sustained growth in the automotive semiconductor market in 2026/2027, showcasing the company's strong competitiveness in electrification and ADAS penetration.
- Industrial Sector Opportunities: With improving macro indicators, Allegro's involvement in emerging growth areas such as data centers, robotics, and grid management is anticipated to create additional growth potential, further strengthening its market position.
- Supply Chain Advantages: Analysts emphasized that Allegro's supply chain diversity, lean inventories, and disciplined operating expenditures provide ongoing margin support and resilience, indicating that future profitability is likely to improve further.
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Analyst Views on ALGM
Wall Street analysts forecast ALGM stock price to fall
7 Analyst Rating
7 Buy
0 Hold
0 Sell
Strong Buy
Current: 41.830
Low
35.00
Averages
39.14
High
49.00
Current: 41.830
Low
35.00
Averages
39.14
High
49.00
About ALGM
Allegro MicroSystems, Inc. is engaged in power and sensing semiconductor solutions for motion control and energy-efficient systems. The Company is a global designer, developer, fabless manufacturer and marketer of sensor integrated circuits (ICs) and application-specific power ICs, enabling the important emerging technologies in the automotive and industrial markets. Its sensor ICs enable its customers to measure motion, speed, position and current, while its power ICs include high-temperature and high-voltage capable motor drivers, power management ICs, light-emitting diode (LED) driver ICs and isolated gate drivers. Its product portfolio includes over 1,500 products across a range of high-performance analog mixed-signal semiconductors. The Company also offers tunneling magnetoresistance (TMR) sensor solutions that provide the highest magnetic sensitivity, lowest power consumption, and the smallest size by comparison to other magnetic technologies.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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Morgan Stanley Upgrades Allegro to Overweight with $51 Price Target
- Rating Upgrade: Morgan Stanley upgraded Allegro MicroSystems from Equal-weight to Overweight and raised the price target from $45 to $51, reflecting confidence in the company's future growth potential.
- Automotive Semiconductor Growth: Analysts noted that Allegro's increasing semiconductor content in Battery Electric Vehicles and Internal Combustion Engine platforms is expected to drive sustained growth in the automotive semiconductor market in 2026/2027, showcasing the company's strong competitiveness in electrification and ADAS penetration.
- Industrial Sector Opportunities: With improving macro indicators, Allegro's involvement in emerging growth areas such as data centers, robotics, and grid management is anticipated to create additional growth potential, further strengthening its market position.
- Supply Chain Advantages: Analysts emphasized that Allegro's supply chain diversity, lean inventories, and disciplined operating expenditures provide ongoing margin support and resilience, indicating that future profitability is likely to improve further.
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Allegro Launches Industry-Leading ACS37017 Current Sensor
- Industry Benchmark Accuracy: Allegro's newly launched ACS37017 current sensor achieves a typical sensitivity error of 0.55%, meeting the high-fidelity feedback requirements for high-voltage power conversion systems, thereby enhancing overall efficiency in power electronics.
- High-Performance Portfolio: The introduction of the ACS37017 marks Allegro's strategic expansion in high-performance current sensors, complementing the ACS37100 and ACS37200, which set industry benchmarks in speed and power density, catering to diverse design needs.
- Simplified System Design: The ACS37017 integrates a stable, non-ratiometric voltage reference, eliminating the need for external precision voltage reference components, reducing material costs and board space while minimizing system noise and errors, thus enhancing signal clarity.
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- Significant Design Wins: In the automotive sector, E-Mobility continues to lead growth with multiple key design wins in Q3, particularly in ADAS systems, highlighting the company's strengthening competitive advantage in future markets.
- Innovative Product Launch: The introduction of a new current sensor IC that reduces power-related losses by up to 90% not only enhances power density in xEV and data center applications but also has the potential to drive future sales growth.
- Optimistic Outlook: Management expects Q4 sales to range between $230 million and $240 million, representing a 22% year-over-year increase, while maintaining gross margins between 49% and 51%, demonstrating confidence in future growth.
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Allegro MicroSystems Q3 Earnings Exceed Expectations
- Earnings Beat: Allegro MicroSystems reported a Q3 non-GAAP EPS of $0.15, beating expectations by $0.01, indicating robust profitability growth amid a competitive landscape.
- Significant Revenue Growth: The company achieved Q3 revenue of $229.21 million, reflecting a 28.8% year-over-year increase and surpassing market expectations by $8.34 million, showcasing strong demand in its sector.
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- Cost Control Challenges: While gross margin is projected between 49% and 51%, operating expenses are expected to rise by approximately 3% to $81 million, primarily due to annual payroll tax resets, which may exert pressure on profitability.
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- Instacart's Strong Performance: Barclays maintains an overweight rating on Instacart, highlighting its rare beat-and-raise earnings report in the internet earnings cycle, suggesting a unique advantage in a competitive market that may attract more investor interest.
- Airbnb Upgraded to Buy: Deutsche Bank upgrades Airbnb from hold to buy, stating that while it faces AI disruption risks, its unique supply chain offers more insulation compared to peers, which is likely to draw more investor attention.
- CrowdStrike's Attractive Valuation: HSBC upgrades CrowdStrike from hold to buy, citing attractive current valuation and projecting a non-GAAP EPS CAGR of 38.3% over FY26-29, indicating strong growth potential.
See More
Morgan Stanley Upgrades Allegro to Overweight with $51 Price Target
- Rating Upgrade: Morgan Stanley upgraded Allegro MicroSystems from Equal-weight to Overweight and raised the price target from $45 to $51, reflecting confidence in the company's future growth potential.
- Automotive Semiconductor Growth: Analysts noted that Allegro's increasing semiconductor content in Battery Electric Vehicles and Internal Combustion Engine platforms is expected to drive sustained growth in the automotive semiconductor market in 2026/2027, showcasing the company's strong competitiveness in electrification and ADAS penetration.
- Industrial Sector Opportunities: With improving macro indicators, Allegro's involvement in emerging growth areas such as data centers, robotics, and grid management is anticipated to create additional growth potential, further strengthening its market position.
- Supply Chain Advantages: Analysts emphasized that Allegro's supply chain diversity, lean inventories, and disciplined operating expenditures provide ongoing margin support and resilience, indicating that future profitability is likely to improve further.
See More
Allegro Launches Industry-Leading ACS37017 Current Sensor
- Industry Benchmark Accuracy: Allegro's newly launched ACS37017 current sensor achieves a typical sensitivity error of 0.55%, meeting the high-fidelity feedback requirements for high-voltage power conversion systems, thereby enhancing overall efficiency in power electronics.
- High-Performance Portfolio: The introduction of the ACS37017 marks Allegro's strategic expansion in high-performance current sensors, complementing the ACS37100 and ACS37200, which set industry benchmarks in speed and power density, catering to diverse design needs.
- Simplified System Design: The ACS37017 integrates a stable, non-ratiometric voltage reference, eliminating the need for external precision voltage reference components, reducing material costs and board space while minimizing system noise and errors, thus enhancing signal clarity.
- Long-Term Stability: With Allegro's proprietary compensation architecture, the ACS37017 maintains highly stable performance despite temperature variations and component aging, ensuring the stability and efficiency of control loops throughout the entire lifespan.
See More
Wall Street Volatility Returns as Microsoft Shares Plunge
- Microsoft Stock Plunge: Microsoft shares fell 12%, marking the largest single-day drop since March 2020, as investors expressed concerns over slowing Azure cloud growth and cautious guidance, resulting in a market cap loss of approximately $400 billion.
- Tech Sector Decline: The Nasdaq 100 dropped 1.6% and the S&P 500 fell 1%, reflecting weakened market confidence in tech stocks, particularly amid questions regarding the pace of AI monetization following Microsoft's results.
- IBM's Strong Performance: International Business Machines Corp. saw a 6% increase in stock price after reporting better-than-expected quarterly results and guidance, standing out as one of the few bright spots in a weak session for large-cap tech stocks.
- Commodity Market Fluctuations: Gold prices tumbled 3% to $5,250 and silver slid 4% to $112, while copper rose 2.5% to a record $6.20 per pound and WTI crude climbed 3.5% to $65 per barrel, indicating a divergence in commodity market trends.
See More
Allegro MicroSystems Reports Strong Q3 2026 Earnings and Growth Momentum
- Sales Performance Exceeds Expectations: Allegro MicroSystems reported Q3 sales of $229 million, surpassing the high end of guidance and reflecting a 29% year-over-year growth, indicating strong demand in the electric vehicle and data center sectors.
- Significant Design Wins: In the automotive sector, E-Mobility continues to lead growth with multiple key design wins in Q3, particularly in ADAS systems, highlighting the company's strengthening competitive advantage in future markets.
- Innovative Product Launch: The introduction of a new current sensor IC that reduces power-related losses by up to 90% not only enhances power density in xEV and data center applications but also has the potential to drive future sales growth.
- Optimistic Outlook: Management expects Q4 sales to range between $230 million and $240 million, representing a 22% year-over-year increase, while maintaining gross margins between 49% and 51%, demonstrating confidence in future growth.
See More
Allegro MicroSystems Q3 Earnings Exceed Expectations
- Earnings Beat: Allegro MicroSystems reported a Q3 non-GAAP EPS of $0.15, beating expectations by $0.01, indicating robust profitability growth amid a competitive landscape.
- Significant Revenue Growth: The company achieved Q3 revenue of $229.21 million, reflecting a 28.8% year-over-year increase and surpassing market expectations by $8.34 million, showcasing strong demand in its sector.
- Optimistic Outlook: For Q4, Allegro expects net sales between $230 million and $240 million, exceeding the consensus estimate of $227.04 million, which underscores confidence in continued growth.
- Cost Control Challenges: While gross margin is projected between 49% and 51%, operating expenses are expected to rise by approximately 3% to $81 million, primarily due to annual payroll tax resets, which may exert pressure on profitability.
See More
