Allegro MicroSystems (NASDAQ:ALGM) Announces Earnings Results

Key Points

• Allegro beat quarterly expectations: Earnings per share came in at $0.26 versus the $0.24 consensus estimate, while revenue reached $276.88 million, up 29.2% year over year and above analyst forecasts.
• Growth momentum remains strong: Design wins rose nearly 40%, bookings increased 45%, and record data-center sales of $46 million jumped more than 150% year over year. Automotive, xEV, ADAS, and robotics programs also contributed to the company’s opportunity pipeline.
• Shares fell despite the strong results: ALGM declined 10.8% to $31.55, while management flagged tightening back-end test capacity and rising input costs. Analysts maintain a “Moderate Buy” consensus rating with an average price target of $51.58.

Allegro MicroSystems (NASDAQ:ALGM - Get Free Report) posted its earnings results on Thursday. The company reported $0.26 earnings per share for the quarter, beating the consensus estimate of $0.24 by $0.02, FiscalAI reports. Allegro MicroSystems had a return on equity of 8.30% and a net margin of 1.50%. The company had revenue of $276.88 million for the quarter, compared to analyst estimates of $270.86 million. During the same quarter in the prior year, the company earned $0.13 earnings per share. Allegro MicroSystems's revenue was up 29.2% compared to the same quarter last year.

Here are the key takeaways from Allegro MicroSystems' conference call:

• Strong Q2 performance: Sales rose 29% year over year to $277 million, exceeding the high end of guidance, while non-GAAP EPS doubled to $0.26. Allegro reported its seventh consecutive quarter of sequential sales growth.
• Demand indicators remain robust: Design wins increased nearly 40% year over year, bookings rose 45%, and backlog expanded across automotive and industrial markets. Management said these trends put the company ahead of its mid-teens long-term sales growth target.
• Data center growth opportunity is expanding: Data center sales reached a record $46 million, up more than 150% year over year, with more than 10 new current-sensor wins for hyperscaler power systems. Management expects fiscal 2027 data center revenue to more than double, although some 800-volt programs were pushed out by one or two quarters.
• Automotive and robotics momentum is strong: Automotive sales grew 11% year over year, with more than 75% of new automotive design wins in xEV and ADAS applications. Allegro also secured humanoid robotics wins, including a program requiring approximately 60 ICs per robot, and will begin sampling an integrated sensor and motor-driver chip for robotic hands in fiscal Q3.
• Capacity and cost pressures remain: Back-end test capacity is beginning to tighten, prompting additional capacity investments in fiscal Q3 and Q4, while wafer supply remains adequate. Input costs, including wafer, energy, labor, and commodities, continue to rise, though pricing actions, manufacturing efficiencies, and operating leverage are expected to support gross-margin expansion toward the company’s greater-than-55% target.

Allegro MicroSystems Trading Down 10.8%

Shares of ALGM traded down $3.82 during mid-day trading on Thursday, hitting $31.55. The company had a trading volume of 2,655,423 shares, compared to its average volume of 2,619,603. The business's 50-day simple moving average is $35.33 and its 200-day simple moving average is $40.65. The company has a quick ratio of 2.33, a current ratio of 3.70 and a debt-to-equity ratio of 0.30. Allegro MicroSystems has a 1-year low of $22.41 and a 1-year high of $71.77. The stock has a market cap of $5.88 billion, a PE ratio of 526.75, a P/E/G ratio of 0.99 and a beta of 1.99.

Wall Street Analysts Forecast Growth

Several equities analysts have weighed in on ALGM shares. Benchmark initiated coverage on Allegro MicroSystems in a research report on Wednesday, August 12th. They set a "buy" rating and a $60.00 price target for the company. Barclays cut Allegro MicroSystems from an "overweight" rating to an "equal weight" rating and set a $48.00 price objective for the company. in a research report on Monday, July 20th. Wall Street Zen raised shares of Allegro MicroSystems from a "hold" rating to a "buy" rating in a research note on Sunday, August 2nd. Royal Bank Of Canada initiated coverage on shares of Allegro MicroSystems in a research report on Friday, October 2nd. They issued an "outperform" rating and a $50.00 price objective for the company. Finally, Morgan Stanley upped their price objective on shares of Allegro MicroSystems from $51.00 to $52.00 and gave the company an "overweight" rating in a research note on Friday, July 31st. One analyst has rated the stock with a Strong Buy rating, ten have assigned a Buy rating, one has assigned a Hold rating and one has assigned a Sell rating to the company. Based on data from MarketBeat.com, Allegro MicroSystems currently has an average rating of "Moderate Buy" and an average target price of $51.58.

Insider Buying and Selling

In related news, SVP Erin Hagen sold 2,285 shares of the company's stock in a transaction that occurred on Monday, August 10th. The shares were sold at an average price of $44.39, for a total transaction of $101,431.15. Following the completion of the transaction, the senior vice president owned 31,052 shares of the company's stock, valued at approximately $1,378,398.28. This represents a 6.85% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is accessible through this hyperlink. Company insiders own 0.50% of the company's stock.

Allegro MicroSystems Company Profile

Allegro MicroSystems, Inc is a semiconductor company that develops and manufactures magnetic sensing and power-management solutions. Its products are designed to help monitor motion, position, speed, current and temperature, as well as control power in electronic systems.

The company's portfolio includes Hall-effect and other magnetic sensors, current sensors, motor drivers, regulators, LED drivers and related integrated circuits. These products are used in automotive applications such as advanced driver-assistance systems, vehicle electrification, powertrain systems, comfort features and safety systems, as well as in industrial and consumer equipment.

Founded in 1990 and headquartered in Manchester, New Hampshire, Allegro serves customers globally through its international operations and distribution network.

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