ALGM Should I Buy
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Allegro MicroSystems Inc (ALGM) is not a strong buy at the moment for a beginner investor with a long-term strategy. Despite positive analyst ratings and strong revenue growth, the recent financial performance shows a significant decline in net income and EPS. Insider selling and lack of strong trading signals further weaken the case for immediate investment. Holding off for now is recommended.
The technical indicators show mixed signals. The MACD is positive but contracting, RSI is neutral at 70.25, and moving averages are bullish (SMA_5 > SMA_20 > SMA_200). However, the stock is trading below its previous close and has faced a -2.29% regular market change. Key support is at 36.96, and resistance is at 42.95.
Analysts have raised price targets significantly, with most firms maintaining a Buy or Overweight rating.
Revenue growth of 28.86% YoY in Q3
Launch of the ACS37017 current sensor, which could drive future growth.
Net income dropped by -220.98% YoY, and EPS fell by -200.00% YoY in Q3
Insiders are selling, with a 129.72% increase in selling activity over the last month.
The stock has a 50% chance of declining -3.94% in the next month based on historical patterns.
In Q3 2026, revenue increased by 28.86% YoY to $229.21 million, but net income dropped significantly by -220.98% YoY to $8.3 million. EPS also declined by -200.00% YoY to $0.04. Gross margin improved slightly to 46.73%, up 2.34% YoY.
Analysts are bullish on ALGM, with multiple firms raising price targets to $44-$46 and maintaining Buy or Overweight ratings. However, UBS noted that rising costs slightly dampened the positive earnings report.
