Allegro MicroSystems, Inc. Common Stock
ALGM
$46.03
-8.07%
Allegro MicroSystems is a fabless designer and marketer of sensor ICs and application-specific analog power ICs, primarily serving the automotive and industrial markets. The company holds a distinct competitive position as a niche leader in magnetic sensor technology, enabling precise motion, speed, and current measurement in demanding environments. The current investor narrative centers on Allegro's growth acceleration driven by content expansion in electric vehicles and advanced driver-assistance systems, alongside a recovery in industrial end-markets, as evidenced by recent revenue growth and analyst upgrades.…
ALGM
Allegro MicroSystems, Inc. Common Stock
$46.03
Related headlines
Investment Opinion: Should I buy ALGM Today?
Rating: Buy. Thesis: Allegro MicroSystems is a high-growth semiconductor play benefiting from secular trends in EVs and ADAS, with accelerating revenue, improving margins, and strong analyst conviction. The consensus Strong Buy rating and average target of $56.55 (22.9% upside) support a bullish stance.
Supporting Evidence: Revenue grew 26.1% YoY to $243.2M, with sequential acceleration. Gross margin improved to 47.1% from 41.4% a year ago. Free cash flow of $124.9M TTM provides financial flexibility. The forward PS ratio of ~3.25x (based on estimated revenue of $1.718B) is more reasonable than the trailing 6.27x, implying the market expects significant top-line expansion. Analysts project EPS of $2.36 for the next fiscal year, giving a forward PE of 19.5x, which is attractive for a growth stock.
Risks & Conditions: The biggest risks are GAAP unprofitability, high volatility (beta 1.897), and dependence on automotive cycles. This Buy rating would be downgraded to Hold if revenue growth decelerates below 15% or if gross margins fall below 45%. Upgrade to Strong Buy if the stock pulls back to $35 or below, offering a more attractive entry point. Overall, ALGM appears fairly valued relative to its growth prospects, with the forward PS of 3.25x and forward PE of 19.5x suggesting reasonable valuation for a company growing at 26%.
Sign up to view all
ALGM 12-Month Price Forecast
Allegro MicroSystems is well-positioned to benefit from secular growth in EVs and ADAS, with strong revenue momentum and improving margins. The valuation, while premium on trailing basis, becomes more reasonable on forward metrics. The high beta and recent pullback create a favorable risk/reward for growth-oriented investors. Key developments to watch include the next earnings report (expected in October 2026) and any updates on EV adoption rates. A sustained revenue growth rate above 20% would support the bull case, while a deceleration below 15% would warrant caution.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Allegro MicroSystems, Inc. Common Stock's 12-month outlook, with a consensus price target around $56.55 and implied upside of +22.8% versus the current price.
Average Target
$56.55
0 analysts
Implied Upside
+22.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$48 - $67
Analyst target range
Allegro is covered by 11 analysts, with a consensus recommendation of 'Strong Buy' (mean rating of 1.36 on a 1-5 scale). The average price target is $56.55, implying approximately 22.9% upside from the current price of $46.03. The distribution leans heavily bullish, with no hold or sell ratings in the provided data, indicating strong conviction among analysts. The target range spans from a low of $48.00 to a high of $67.00. The high target of $67.00 assumes continued growth acceleration and margin expansion, likely driven by EV adoption and content gains. The low target of $48.00 still implies upside and may reflect a more conservative view on near-term headwinds. Recent ratings actions show no downgrades, with firms like TD Cowen, Mizuho, and Needham reiterating Buy ratings, reinforcing positive sentiment. The relatively tight spread between low and high targets (about 40% from low to high) suggests moderate uncertainty, but the consensus remains firmly bullish.
Bulls vs Bears: ALGM Investment Factors
Allegro MicroSystems presents a compelling growth story with accelerating revenue, improving margins, and strong analyst support. The bull case is anchored by 26.1% YoY revenue growth, a healthy balance sheet, and a consensus Strong Buy rating with 22.9% upside. However, bears point to GAAP unprofitability, a premium valuation (6.27x PS vs. industry ~4-5x), and high volatility (beta 1.897). The single most important tension is whether revenue growth can sustain above 20% to justify the premium valuation and eventually drive profitability. Currently, the bull case has stronger evidence given the growth trajectory and analyst conviction, but the stock's recent 1-month decline of -16.9% highlights near-term uncertainty.
Bullish
- Strong Revenue Growth Acceleration: Revenue grew 26.1% YoY to $243.2 million in Q4 2026, accelerating from prior quarters. This growth is driven by content expansion in EVs and ADAS, with both Magnetic Sensors ($140.9M) and Power ICs ($102.3M) segments contributing.
- Healthy Balance Sheet with Low Debt: Current ratio of 3.45 and debt-to-equity of 0.30 indicate strong liquidity and conservative leverage. The company has ample financial flexibility to invest in growth without distress.
- Analyst Consensus Strong Buy: 11 analysts rate ALGM a Strong Buy (mean 1.36) with an average price target of $56.55, implying 22.9% upside. No hold or sell ratings, and recent upgrades from TD Cowen, Mizuho, and Needham reinforce positive sentiment.
- Improving Gross Margin Trajectory: Gross margin improved to 47.1% in Q4 2026 from 41.4% a year ago, reflecting better cost management or favorable product mix. This trend supports potential operating leverage as revenue scales.
Bearish
- Unprofitable on GAAP Basis: Net loss of -$16.5 million in Q4 2026, though narrowing from -$33.7M in Q2 2025. Negative net margin of -1.7% and ROE of -1.6% highlight profitability challenges typical of high-growth fabless semiconductor firms.
- High Valuation Premium to Peers: Trailing PS ratio of 6.27x is above the semiconductor industry average of ~4-5x, representing a 25-57% premium. While justified by growth, any deceleration could lead to multiple compression.
- Elevated Stock Volatility: Beta of 1.897 makes ALGM nearly 90% more volatile than the S&P 500. The stock has experienced sharp drawdowns, including a -39.22% max drawdown, amplifying downside risk in market downturns.
- Thin Operating Margins: Operating margin is only 7.2% in Q4 2026, weighed by high R&D ($53.9M) and SG&A ($43.1M) expenses. Limited operating leverage leaves earnings sensitive to revenue fluctuations.
ALGM Technical Analysis
The stock is in a strong uptrend over the past year, with a 1-year price change of +40.5%. The current price of $46.03 sits at 64% of its 52-week range ($22.41 to $71.77), indicating it is closer to the highs but not overextended, suggesting room for further upside if momentum persists. However, the stock has corrected sharply from its 52-week high of $71.77, reflecting a pullback within the broader uptrend. Short-term momentum has decelerated significantly, with a 1-month price change of -16.9% contrasting with a 3-month change of +4.3%. This divergence suggests a temporary pullback or profit-taking after a strong run, rather than a trend reversal, as the 3-month trend still aligns with the longer-term uptrend. The relative strength index (RSI) is not provided, but the sharp 1-month decline indicates oversold conditions may be emerging. Key support lies near the 52-week low of $22.41, while resistance is at the 52-week high of $71.77. A breakout above $71.77 would signal a resumption of the uptrend, while a breakdown below $22.41 would indicate a bearish reversal. With a beta of 1.897, the stock is nearly 90% more volatile than the S&P 500, implying higher risk and potential for larger swings.
Beta
1.90
1.90x market volatility
Max Drawdown
-39.2%
Largest decline past year
52-Week Range
$22-$72
Price range past year
Annual Return
+40.5%
Cumulative gain past year
| Period | ALGM Return | S&P 500 |
|---|---|---|
| 1m | -16.9% | +1.4% |
| 3m | +4.3% | +3.3% |
| 6m | +39.5% | +6.3% |
| 1y | +40.5% | +16.0% |
| ytd | +71.1% | +8.4% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
ALGM Fundamental Analysis
Revenue is growing strongly, with the most recent quarterly revenue of $243.2 million representing a 26.1% year-over-year increase. This growth has accelerated from prior quarters, as revenue has risen from $192.8 million in Q4 2025 to $243.2 million in Q4 2026, driven by both Magnetic Sensors ($140.9 million) and Power ICs ($102.3 million) segments. The consistent sequential growth suggests robust demand in automotive and industrial markets, supporting the investment case for continued expansion. The company is currently unprofitable on a GAAP basis, with a net loss of -$16.5 million in the most recent quarter, though this loss has narrowed from -$33.7 million in Q2 2025. Gross margin improved to 47.1% from 41.4% a year ago, indicating better cost management or product mix. However, operating margin remains thin at 7.2%, reflecting high R&D and SG&A expenses typical of a fabless semiconductor company. The balance sheet is healthy, with a current ratio of 3.45 and a low debt-to-equity ratio of 0.30, indicating ample liquidity and conservative leverage. Free cash flow was $18.7 million in the quarter, and trailing twelve-month FCF of $124.9 million provides a FCF yield of approximately 2.2% relative to the current market cap. ROE is negative at -1.6% due to the net loss, but the company generates sufficient cash to fund operations without external financing.
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
Open an Account, get $2 TSLA now!
Valuation Analysis: Is ALGM Overvalued?
Since net income is negative (TTM net income of -$16.5 million), the trailing PE ratio is not meaningful, so we lead with the price-to-sales (PS) ratio. The trailing PS ratio is 6.27x, while the forward PS (based on estimated revenue of $1.718 billion) is approximately 3.25x, implying the market expects significant revenue growth. The gap between trailing and forward PS suggests optimism about top-line expansion. Compared to the semiconductor industry average PS ratio (typically around 4-5x), Allegro's trailing PS of 6.27x represents a premium of about 25-57%, which may be justified by its strong revenue growth and niche market position. Historically, Allegro's PS ratio has ranged from roughly 17x to 35x over the past few years, so the current 6.27x is near the lower end of its historical band. This suggests the stock is relatively cheap compared to its own history, potentially offering a value opportunity if growth continues, though the low multiple also reflects the recent profitability challenges.
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 & Operational Risks: Allegro's GAAP net loss of -$16.5 million in Q4 2026, though narrowing, indicates ongoing profitability challenges. Operating margin of 7.2% is thin, with high R&D ($53.9M) and SG&A ($43.1M) expenses consuming a significant portion of revenue. The negative ROE of -1.6% and net margin of -1.7% underscore that the company is not yet generating shareholder returns on an accounting basis. However, positive free cash flow of $124.9 million TTM provides a cushion, and the low debt-to-equity of 0.30 limits financial distress risk. The primary financial risk is that growth decelerates before margins reach sustainable levels, leading to cash burn or dilution.
Market & Competitive Risks: The stock's beta of 1.897 implies high sensitivity to market movements, making it vulnerable to sector rotation or macro shocks. The trailing PS ratio of 6.27x is a premium to the semiconductor industry average of ~4-5x, leaving room for multiple compression if growth disappoints. Competitive risks include rapid technological changes in the sensor and power IC markets, with larger players like Infineon and Texas Instruments investing heavily. Recent news of a sector-wide rotation into semiconductors (e.g., Micron's 18% rally) is a tailwind, but geopolitical tensions (Iran) could disrupt automotive supply chains.
Worst-Case Scenario: A severe automotive downturn or EV adoption slowdown could cause revenue growth to stall or decline. Combined with high operating leverage, this could lead to wider losses and a reevaluation of the growth premium. In such a scenario, the stock could retest its 52-week low of $22.41, representing a -51.3% decline from the current price of $46.03. This aligns with the historical max drawdown of -39.22%, but a more extreme scenario could see a -51% drop to the 52-week low.
FAQ
The key risks are: 1) Financial: GAAP unprofitability with a net loss of -$16.5M and thin operating margin of 7.2% could persist if growth slows. 2) Valuation: Trailing PS of 6.27x is a premium to peers, leaving room for multiple compression. 3) Market: High beta of 1.897 makes the stock vulnerable to market downturns; a 1-month decline of -16.9% illustrates this. 4) Company-specific: Dependence on automotive and industrial cycles; a slowdown in EV adoption could significantly impact revenue. The most severe risk is a -51% decline to the 52-week low of $22.41 if a cyclical downturn materializes.
The 12-month forecast is moderately bullish. The base case (50% probability) sees the stock trading in the $48-$56.55 range, aligning with the analyst average target of $56.55, assuming steady 20-25% revenue growth. The bull case (30% probability) targets $56.55-$67.00, driven by faster EV adoption and margin expansion. The bear case (20% probability) sees a decline to $22.41-$48.00 if a cyclical downturn hits. The most likely scenario is the base case, with the stock gradually appreciating as the company executes on its growth strategy. Key assumptions include sustained automotive demand and gross margins near 47%.
ALGM's trailing PS ratio of 6.27x is above the semiconductor industry average of ~4-5x, suggesting a premium. However, the forward PS ratio of ~3.25x (based on estimated revenue of $1.718B) is more reasonable and implies the market expects significant growth. Historically, ALGM's PS has ranged from 17x to 35x, so the current 6.27x is near the lower end of its own history, indicating relative cheapness. The forward PE of 19.5x (based on estimated EPS of $2.36) is attractive for a company growing at 26%. Overall, ALGM appears fairly valued given its growth trajectory, with the premium justified by its niche market position and accelerating revenue.
ALGM is a good buy for growth-oriented investors with a higher risk tolerance. The stock offers 22.9% upside to the analyst average target of $56.55, supported by 26.1% revenue growth and a Strong Buy consensus. However, the stock is volatile (beta 1.897) and currently unprofitable on a GAAP basis, with a net loss of -$16.5 million in the latest quarter. The biggest downside risk is a slowdown in automotive demand, which could pressure the premium valuation (trailing PS 6.27x). For investors who believe in the EV and ADAS secular trend, the current price near $46 provides a reasonable entry point, especially considering the forward PS of 3.25x.
ALGM is better suited for long-term investment given its growth stage and volatility. The company is investing heavily in R&D (22% of revenue) to capture secular trends in EVs and ADAS, which should pay off over multiple years. The beta of 1.897 makes it too volatile for conservative short-term trading, though active traders could capitalize on the wide price swings. The lack of a dividend means total return depends on capital appreciation. A minimum holding period of 3-5 years is recommended to allow the growth story to materialize and for margins to improve. Short-term, the stock may remain choppy due to macro and sector rotation risks.