Allegro MicroSystems: Strong Financial Performance and Growth Prospects Drive Buy Rating

Analyst Mark Lipacis of Evercore ISI reiterated a Buy rating on Allegro MicroSystems (ALGM – Research Report), boosting the price target to $29.00.

Mark Lipacis has given his Buy rating due to a combination of factors including Allegro MicroSystems’ strong financial performance and promising growth prospects. The company reported a significant earnings per share (EPS) beat for the March quarter, exceeding expectations by 29%, and provided an optimistic outlook for the June quarter with an EPS forecast 19% above consensus. This performance is supported by a cyclical recovery and restocking cycle, with management noting a decline in distributor and direct customer inventories, a 20% quarter-over-quarter increase in bookings, and a resurgence in backlog growth.
Additionally, Allegro MicroSystems has demonstrated robust growth in regions outside of China, with notable revenue increases in the Americas and the rest of Asia. The company’s gross margins are expected to improve significantly in the second half of 2025, driven by restructuring efforts anticipated to yield substantial cost savings. Furthermore, Allegro’s strong traction in design wins, particularly in strategic areas such as e-mobility and clean energy, underscores its potential for sustained growth. These factors collectively contribute to the positive outlook and the Buy rating assigned by Mark Lipacis.

In another report released today, Mizuho Securities also reiterated a Buy rating on the stock with a $31.00 price target.