Allegro MicroSystems
ALGM
$36.61
+2.95%
Allegro MicroSystems, Inc. is a fabless semiconductor company that designs, develops, and markets sensor ICs and application-specific analog power ICs, primarily serving the automotive and industrial markets. The company is a market leader in magnetic sensor technology, offering products that enable precise motion, speed, position, and current sensing, as well as power management and motor driver solutions. Currently, the stock is under scrutiny as it navigates a cyclical downturn in the semiconductor industry, with recent quarterly losses and a significant pullback from its 52-week high, while investors debate the pace of recovery in its end markets and the potential for growth driven by electric vehicles and industrial automation.…
ALGM
Allegro MicroSystems
$36.61
Related headlines
Investment Opinion: Should I buy ALGM Today?
Based on the analysis, ALGM is rated a Buy. The consensus is 'Strong Buy' with an average target of $54.82, implying 49.7% upside. The thesis is that the company's revenue growth and margin expansion will drive a return to profitability, and the current valuation is attractive on a sales basis.
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ALGM 12-Month Price Forecast
The AI model assesses ALGM as bullish with medium confidence. The strong revenue growth and margin improvement are positive signals, but the recent net loss and high forward PE warrant caution. The stock's valuation on a sales basis is attractive, and analyst sentiment is overwhelmingly positive. However, the high beta and cyclical exposure mean that the stock could be volatile. The stance would be upgraded to high confidence if the company delivers positive EPS in the next quarter, and downgraded if revenue growth decelerates below 15%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Allegro MicroSystems's 12-month outlook, with a consensus price target around $54.82 and implied upside of +49.7% versus the current price.
Average Target
$54.82
0 analysts
Implied Upside
+49.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$48 - $62
Analyst target range
Allegro MicroSystems has coverage from 11 analysts, with a consensus recommendation of 'Strong Buy' (mean rating of 1.33 on a 1-5 scale). The average price target is $54.82, implying a substantial upside of 49.7% from the current price of $36.61. The distribution of ratings is heavily bullish, with no sell ratings and only a few holds, indicating strong confidence in the company's recovery. The high target of $62.00 suggests potential for further upside if the company exceeds expectations, while the low target of $48.00 still represents a 31.1% upside, reflecting a relatively narrow range that signals high conviction among analysts. Recent ratings actions have been consistently positive, with firms like TD Cowen, Mizuho, and Needham reiterating Buy or Outperform ratings in the past few months, reinforcing the bullish sentiment.
Bulls vs Bears: ALGM Investment Factors
Allegro MicroSystems presents a compelling recovery story with strong revenue growth and margin expansion, but it is marred by recent losses and high valuation multiples. The bull case is supported by analyst optimism and a discounted PS ratio, while the bear case highlights earnings volatility and a steep drawdown. Currently, the bull side has stronger evidence due to accelerating revenue and clear analyst conviction, but the key tension is whether the company can sustain profitability and grow into its forward PE. If the recovery continues, the stock has significant upside; if not, it could face further downside.
Bullish
- Strong Revenue Growth: Q4 FY2026 revenue grew 26.1% YoY to $243.2M, with sequential growth from $203.4M in Q1 to $243.2M in Q4, indicating accelerating demand. This robust top-line expansion is a key driver for the bullish case.
- Improving Gross Margins: Gross margin expanded to 47.1% in Q4 FY2026 from 41.4% in the year-ago quarter, reflecting better product mix and cost controls. This margin expansion supports profitability as revenue scales.
- Analyst Consensus Strong Buy: With 11 analysts, the consensus is 'Strong Buy' (mean rating 1.33), and the average price target of $54.82 implies 49.7% upside from the current price of $36.61. No sell ratings and a narrow target range (low $48, high $62) signal high conviction.
- Undervalued on Sales: The PS ratio of 6.27x is well below the industry average of 22.95x, suggesting the stock is trading at a significant discount to peers. This valuation gap provides a margin of safety if growth continues.
Bearish
- Recent Net Loss: Q4 FY2026 reported a net loss of -$16.5M, with a net margin of -6.8%, reversing the profitable Q2 and Q3. This volatility in earnings raises concerns about the sustainability of profitability.
- High Valuation on Forward Earnings: The forward PE of 24.8x is not cheap, and the PEG ratio of 4.71x suggests the stock is expensive relative to its growth rate. If earnings recovery disappoints, the stock could de-rate.
- Significant Drawdown from High: The stock is 49% below its 52-week high of $71.77, and the 3-month price change is -21.1%, indicating strong negative momentum. This could reflect underlying operational or market concerns.
- High Beta and Volatility: With a beta of 1.91, the stock is highly sensitive to market swings. The 1-month relative strength of -12.5% vs SPY shows it's underperforming, adding risk for investors.
ALGM Technical Analysis
Allegro MicroSystems has experienced a volatile but overall upward trend over the past year, with the stock price rising 21.6% from a year ago, though it has recently corrected sharply. As of September 4, 2026, the stock trades at $36.61, which is 31.3% above its 52-week low of $22.41 but 49.0% below its 52-week high of $71.77, placing it in the lower third of its 52-week range. This positioning suggests that while the stock has recovered from its lows, it remains well off its peak, indicating a potential value opportunity or a sign of persistent weakness depending on future catalysts.
Beta
1.91
1.91x market volatility
Max Drawdown
-49.0%
Largest decline past year
52-Week Range
$22-$72
Price range past year
Annual Return
+21.6%
Cumulative gain past year
| Period | ALGM Return | S&P 500 |
|---|---|---|
| 1m | -12.4% | -0.4% |
| 3m | -21.1% | +4.2% |
| 6m | +14.7% | +13.7% |
| 1y | +21.6% | +19.0% |
| ytd | +36.0% | +12.9% |
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ALGM Fundamental Analysis
Allegro MicroSystems' revenue has shown a strong recovery, with the most recent quarter (Q4 FY2026, ended March 27, 2026) reporting $243.2 million, a 26.1% year-over-year increase. This follows a sequential growth trend from $203.4 million in Q1 FY2026 to $229.2 million in Q3 FY2026, indicating accelerating growth. However, the company reported a net loss of -$16.5 million in Q4, with a net margin of -6.8%, a deterioration from the profitable quarters in Q2 and Q3 FY2026, which had net incomes of $6.5 million and $8.3 million, respectively. The gross margin improved to 47.1% in Q4, up from 41.4% in the year-ago quarter, reflecting better cost management and product mix.
Quarterly Revenue
$243187000.0B
2026-03
Revenue YoY Growth
+26.1%
YoY Comparison
Gross Margin
47.1%
Latest Quarter
Free Cash Flow
$124893000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ALGM Overvalued?
Given that Allegro MicroSystems has negative trailing twelve-month net income (EPS of -$0.003), the price-to-sales (PS) ratio is the most appropriate valuation metric. The current PS ratio is 6.27x, which is significantly lower than the industry average of 22.95x (based on historical data), suggesting the stock trades at a substantial discount to its sector. However, the forward PE ratio of 24.8x indicates that the market expects a return to profitability, with analysts projecting EPS of $2.36 for the next fiscal year. The gap between the trailing negative earnings and forward positive earnings implies that the market is pricing in a strong earnings recovery, which is supported by the company's recent revenue growth and improving margins.
PE
-374.2x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 21x~56x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
66.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include the company's recent net loss of -$16.5M in Q4 FY2026, which reversed profitable quarters, indicating earnings instability. The negative trailing EPS of -$0.003 and a net margin of -1.7% (TTM) highlight that profitability is not yet consistent. Debt-to-equity is moderate at 0.30, but interest expenses of $8.1M in Q4 are a drag, and the company's reliance on continued revenue growth to justify its forward PE of 24.8x is a risk if growth decelerates. Free cash flow is positive at $124.9M TTM, providing some cushion, but the high EV/EBITDA of 66.2x leaves little room for error.