Allegro MicroSystems (NASDAQ:ALGM) Stock Price Down 10.8% - Should You Sell?

Key Points

• Allegro MicroSystems shares fell 10.8% to about $31.56, with trading volume roughly 81% below its average. The stock is also below its 50-day and 200-day moving averages.
• Despite the decline, the company exceeded quarterly expectations, reporting EPS of $0.26 versus $0.24 expected and revenue of $276.9 million, up 29.2% year over year.
• Analysts maintain a consensus “Moderate Buy” rating with a $51.58 price target, although recent opinions are mixed; the stock’s high valuation, including a P/E ratio above 537, remains a risk.

Allegro MicroSystems, Inc. (NASDAQ:ALGM - Get Free Report)'s share price traded down 10.8% on Thursday. The stock traded as low as $32.20 and last traded at $31.5550. Approximately 492,638 shares traded hands during trading, a decline of 81% from the average daily volume of 2,609,451 shares. The stock had previously closed at $35.37.

Analyst Ratings Changes

Several brokerages have recently issued reports on ALGM. Morgan Stanley raised their price objective on Allegro MicroSystems from $51.00 to $52.00 and gave the stock an "overweight" rating in a research note on Friday, July 31st. Wells Fargo & Company dropped their target price on Allegro MicroSystems from $56.00 to $45.00 and set an "overweight" rating on the stock in a research report on Tuesday, October 20th. Barclays lowered shares of Allegro MicroSystems from an "overweight" rating to an "equal weight" rating and set a $48.00 price target for the company. in a research report on Monday, July 20th. Needham & Company LLC lifted their price objective on shares of Allegro MicroSystems from $55.00 to $57.00 and gave the company a "buy" rating in a research note on Thursday, July 30th. Finally, Benchmark initiated coverage on shares of Allegro MicroSystems in a report on Wednesday, August 12th. They issued a "buy" rating and a $60.00 price objective on the stock. One research analyst has rated the stock with a Strong Buy rating, ten have assigned a Buy rating, one has given a Hold rating and one has assigned a Sell rating to the company's stock. Based on data from MarketBeat.com, the stock presently has a consensus rating of "Moderate Buy" and a consensus price target of $51.58.

Allegro MicroSystems Stock Down 8.9%

The stock has a market cap of $6.01 billion, a PE ratio of 537.32, a price-to-earnings-growth ratio of 0.99 and a beta of 1.99. The business has a 50-day moving average price of $35.33 and a 200-day moving average price of $40.65. The company has a current ratio of 3.70, a quick ratio of 2.33 and a debt-to-equity ratio of 0.30.

Allegro MicroSystems (NASDAQ:ALGM - Get Free Report) last posted its quarterly earnings data on Thursday, October 29th. The company reported $0.26 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.24 by $0.02. 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 analysts' expectations of $270.86 million. During the same period in the previous year, the firm posted $0.13 EPS. Allegro MicroSystems's revenue was up 29.2% compared to the same quarter last year. As a group, analysts forecast that Allegro MicroSystems, Inc. will post 0.65 earnings per share for the current year.

Insiders Place Their Bets

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

Institutional Trading of Allegro MicroSystems

Several institutional investors have recently made changes to their positions in ALGM. BlackRock Inc. acquired a new position in Allegro MicroSystems in the second quarter valued at $966,975,000. Dimensional Fund Advisors LP increased its position in shares of Allegro MicroSystems by 1.4% during the first quarter. Dimensional Fund Advisors LP now owns 2,170,487 shares of the company's stock worth $68,399,000 after purchasing an additional 30,340 shares in the last quarter. Bank of America Corp DE acquired a new stake in shares of Allegro MicroSystems during the second quarter worth about $64,171,000. Wellington Management Group LLP lifted its holdings in shares of Allegro MicroSystems by 21.1% in the 2nd quarter. Wellington Management Group LLP now owns 814,937 shares of the company's stock valued at $56,736,000 after purchasing an additional 141,841 shares during the last quarter. Finally, Principal Financial Group Inc. lifted its holdings in shares of Allegro MicroSystems by 2.8% in the 1st quarter. Principal Financial Group Inc. now owns 1,790,466 shares of the company's stock valued at $56,453,000 after purchasing an additional 48,170 shares during the last quarter. Hedge funds and other institutional investors own 56.45% of the company's stock.

About Allegro MicroSystems

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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