Key Takeaways
- Allegro MicroSystems fell 7%, even though sales rose 29% to $277 million and beat estimates.
- Its guidance implies year-over-year sales growth slowing to 23% next quarter, from 29%.
- Its data center and auto results matter for Monolithic Power Systems, Navitas Semiconductor and NXP Semiconductors.
- The drop leaves Allegro’s forward P/E below its five-year average, so the selloff looks overdone.
Allegro MicroSystems (ALGM) stock tanked 7% despite beating estimates and guiding above them.
Its record data center sales are a good sign for Monolithic Power Systems (MPWR), and its new 800V data center products compete with Navitas Semiconductor (NVTS). Its auto growth matches what NXP Semiconductors (NXPI) reported on Tuesday.
A beat on every line
Its fiscal Q2 ended Sept. 25 with:
- Sales of $277 million, up 29% and above the $270.9 million consensus
- Non-GAAP EPS of $0.26, double last year’s and above the $0.24 consensus
- Industrial & Other sales up 79% to $104 million on record data center sales, and automotive up 11%
“Our forward demand signals strengthened significantly this quarter,” CEO Mike Doogue said in the release. Design wins were the highest since Allegro’s 2020 IPO.
Growth slows from here
Allegro guided to $278-$288 million of sales for its December quarter, above the $276.8 million consensus. But the midpoint means 23% year-over-year growth, down from 29%.
My read: after a run-up, investors wanted more than a roughly 2% step up from the September quarter.
Allegro traded at 31x forward earnings at Wednesday’s close, below its five-year average of 38x:
At the current price, it’s about 28x, on earnings that analysts expect to nearly double in the fiscal year ending March 2027.
TIKR tracks 12 analysts on Allegro MicroSystems. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Allegro MicroSystems, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Allegro MicroSystems’ Analyst Ratings
Good news for peers, and a rival for Navitas
Monolithic Power’s Enterprise Data sales rose 164% to $506.7 million in its September quarter, and Allegro’s record data center quarter suggests the AI data center build-out is still going.
Navitas is sampling chips for 800V AI data centers and expects selected hyperscalers to ramp in 2027. It’s far smaller, with $10.5 million of June-quarter revenue. The company’s report next week should show whether it’s still winning those designs.
NXP’s automotive sales rose 13% to $2.07 billion in its September quarter, close to Allegro’s 11%. That suggests the auto chip recovery reaches beyond Allegro.
The selloff looks overdone
My take: the drop lets investors buy Allegro’s best design-win quarter since its IPO at a below-average multiple.
Of course, those design wins still have to become sales. So, watch whether December-quarter gross margin reaches the 52.5% top of the guide.
So what is Allegro MicroSystems stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
