Key Takeaways
- Morgan Stanley raised its Astera Labs price target to $389 from $382 on Nov. 4 and kept its Overweight rating. The new target is 75% above the current share price.
- Astera’s third-quarter revenue and fourth-quarter guidance both came in above analysts’ estimates, but the stock is still 55% below its June high.
- Most other firms cut their targets after management said the first Scorpio X switch platforms have finished much of their initial ramp.
- Morgan Stanley’s target needs about the same forward P/E Astera averaged over the past year, and earnings estimates are rising, so the call looks right.
Astera Labs (ALAB) beat Wall Street’s numbers again on Nov. 3, and the stock slipped again. It’s now 55% below its June 30 high.
Morgan Stanley went the other way. On Nov. 4, it raised its price target to $389 from $382 and kept its Overweight rating. That’s 75% above Wednesday’s $222.76 close.
Beat after beat, and still sliding
Third-quarter revenue jumped 154% from a year earlier to $584.9 million, ahead of the $551 million analysts expected. Astera also guided fourth-quarter revenue to $730 million to $750 million, against a $656 million consensus.
On the call, CFO Desmond Lynch said “the initial Scorpio X platforms have completed much of their initial deployment ramps,” though he expects new platforms and customers to keep Scorpio X growing through 2027.
My read: investors heard only the first half of that answer, because analysts had already modeled growth of only about 5% a quarter in the first half of 2027.
Morgan Stanley went against the crowd
Most firms cut their targets after the report, including Stifel, which saw 60% upside two weeks ago, to $370 from $460. Morgan Stanley’s $389 is almost exactly the Street’s $388 average.
TIKR tracks 25 analysts on Astera Labs. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Astera Labs, 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 Astera Labs’ Analyst Ratings
Does $389 add up?
The 25 analysts covering Astera have roughly doubled their average target over the past year, to $388 from $189, and it has stayed there through the fall:
That’s because earnings estimates keep climbing. Analysts expect normalized EPS of $4.03 this year, $6.50 in 2027 and $8.19 in 2028, up from $1.84 in 2025:
I’d expect those numbers to go up after Astera guided fourth-quarter earnings to $1.62 to $1.66 a share, against the $1.42 analysts expected.
The stock hasn’t kept up. Its forward P/E fell to 40x at the Nov. 2 close, the lowest of the past year, and it’s even lower at today’s price:
Morgan Stanley’s $389 works out to about 69x expected earnings of $5.67 a share over the next twelve months. That’s just under the stock’s 72x average for the past year.
Morgan Stanley has this one right
That 72x average includes June’s 143x peak, so $389 does need investors to warm back up to the stock. Astera’s top three end customers also made up about 86% of its 2025 revenue.
Still, I think Morgan Stanley has it right. A year from now, the forward P/E will mostly reflect 2028, when analysts see $8.19 a share, and on that figure $389 would be a much lower multiple than 69x.
Management expects Scorpio X to ship pre-production volumes to new customers this quarter. If that slips when Astera reports early next year, the plateau worries will have a point.
So what is Astera Labs 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!
