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Allegro MicroSystems (ALGM)
NASDAQ:ALGM
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Allegro MicroSystems
(NASDAQ:ALGM)
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Rating:66Neutral
Price Target:
$41.00
▲(11.08% Upside)
The score is driven by improving operational momentum and upbeat guidance from the latest earnings call, alongside supportive price momentum. Offsetting this are still-weak profitability (despite better cash flow) and a negative P/E that reduces valuation support.
Positive Factors
Product innovation & design wins
New sensor and isolated SiC gate driver introductions plus multi‑quarter design wins materially expand Allegro's IP and content per platform. These products target secular markets (eMobility, inverters, data center) and can sustain higher long‑term TAM and stickier OEM relationships.
Data center and eMobility end‑market momentum
Diversified growth from data center and rapidly expanding eMobility sales reduces reliance on a single cyclical end market. Structural secular demand for electrification and compute creates multi‑year growth vectors, supporting revenue durability beyond short cycle swings.
Improving cash generation and liquidity
Material improvement in operating and free cash flow provides funding to invest in R&D, support product ramps, and service debt without dilutive financing. Strong liquidity and untapped credit enhance resilience through industry cycles and support strategic initiatives over coming quarters.
Negative Factors
Profitability still negative
Sustained net losses impair return on equity and limit reinvestment capacity. Until GAAP profitability normalizes, the company faces higher cost of capital and pressure to convert improving top‑line and cash flow into durable earnings, which is critical for long‑term credit and investor confidence.
China exposure and ASP pressure
High sales concentration in China and ongoing modest ASP declines create a structural margin headwind. Persistent geographic/mix sensitivity can depress long‑run gross margins unless offset by higher volumes, better mix or cost reductions in the supply chain and pricing discipline.
Automotive shipments and margins below prior peaks
Automotive end‑market recovery lags prior peaks, limiting high‑content revenue potential. Coupled with margins under prior highs, this indicates structural work remains to restore scale economics — product mix, supplier cost wins and higher automotive volumes are needed for sustained margin recovery.
Allegro MicroSystems (ALGM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.83B
Dividend YieldN/A
Average Volume (3M)2.24M
Price to Earnings (P/E)―
Beta (1Y)1.87
Revenue Growth-7.23%
EPS Growth-15.69%
CountryUS
Employees4,593
SectorTechnology
Sector Strength88
IndustrySemiconductors
Share Statistics
EPS (TTM)0.15
Shares Outstanding185,119,050
10 Day Avg. Volume3,348,572
30 Day Avg. Volume2,239,410
Financial Highlights & Ratios
PEG Ratio0.43
Price to Book (P/B)5.02
Price to Sales (P/S)6.44
P/FCF Ratio212.51
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue8.29
Enterprise Value/Gross Profit18.41
Enterprise Value/Ebitda104.94
Forecast
1Y Price Target
$43.00Price Target Upside16.50% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Allegro MicroSystems Business Overview & Revenue Model
Company DescriptionAllegro MicroSystems, Inc. designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; power ICs comprising motor driver ICs, and regulator and LED driver ICs; and photonic and 3D sensing components, including photodiodes, eye-safe lasers, and readout ICs for LiDAR applications. The company sells its products to original equipment manufacturers and suppliers primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment. It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets. The company was founded in 1990 and is headquartered in Manchester, New Hampshire. Allegro MicroSystems, Inc. is a subsidiary of Sanken Electric Co., Ltd.
How the Company Makes MoneyAllegro MicroSystems generates revenue primarily through the sale of its semiconductor products, including integrated circuits and magnetic sensors. The company's revenue model is driven by a combination of direct sales to original equipment manufacturers (OEMs) and distribution partners. Key revenue streams include automotive applications, where demand for electric vehicle components is rapidly growing, as well as industrial automation and consumer electronics. Allegro often engages in strategic partnerships with technology firms and automotive manufacturers to integrate its solutions into their products, enhancing its market presence and driving sales. Additionally, the company benefits from ongoing trends toward electrification and automation, which contribute to increased demand for its advanced semiconductor technologies.
Allegro MicroSystems Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational momentum: above‑guide revenue and EPS, double‑digit year‑over‑year sales growth, record data center contribution, robust cash generation, meaningful design wins across strategic end markets, and constructive Q4 guidance. Challenges include modest pricing pressure (low single‑digit ASP declines), mix/geography impacts (China exposure) that slightly pressured margins, automotive shipments still below peak levels, and near‑term OpEx increases tied to variable compensation and payroll resets. Overall, the positives (solid growth, margin improvement, product innovation and healthy cash flow) substantially outweighed the noted headwinds.Q3-2026 Updates
Positive Updates
Revenue and EPS Beat
Q3 net sales were $229 million, above the high end of guidance. Non-GAAP EPS was $0.15, above the midpoint. Q3 sales increased 7% sequentially and 29% year‑over‑year; EPS increased 15% sequentially and 114% year‑over‑year.
Improving Profitability and Strong Margins
Q3 gross margin was 49.9% (up ~30 basis points sequentially), operating margin was 15.4% (up 150 bps sequentially), and adjusted EBITDA was 20.1% of sales.
Robust Cash Generation and Liquidity
Operating cash flow was $45 million, CapEx $4 million, free cash flow $41 million (18% of Q3 sales). Cash balance ended at $163 million and available credit of $256 million remains untapped.
Strong End‑market Growth — Automotive and Industrial
Automotive sales grew 6% sequentially and 28% year‑over‑year; eMobility sales increased 46% year‑over‑year. Industrial & other sales rose 11% sequentially and 31% year‑over‑year, led by data center strength.
Data Center Momentum and New Product Ramps
Data center reached a new quarterly record at 10% of sales (up 31% sequentially). Fan driver ICs remain the largest contributor; current sensors and newly sampled isolated SiC gate drivers are beginning to ramp, expanding future content.
Design Wins, Bookings and Backlog Strength
Management reported multi‑quarter highs in bookings and backlog and significant design wins across ADAS, XEV, data center and robotics (including wins for position sensors, motor drivers, onboard charging and traction inverters).
Product Innovation
Introduced a compact current sensor that can measure up to 200A and reportedly cut power‑related losses by up to 90%; released first isolated gate driver IC for silicon carbide transistors and are broadly sampling to market leaders.
Positive Q4 Guidance and Balance Sheet Actions
Q4 sales guidance of $230–$240 million (midpoint ~22% YoY growth). Gross margin guidance 49–51% (midpoint implies ~440 bps improvement vs prior year). Term loan repriced down 25 bps to SOFR +175 bps reflecting lender confidence.
Negative Updates
Geographic and Mix Pressure on Gross Margin
China comprised 30% of Q3 ship‑to sales, which management said reduced gross margin roughly ~10 basis points versus guidance midpoint; company still expects low single‑digit ASP declines (albeit less pronounced vs prior year).
Pricing Headwinds
Management expects low single‑digit reductions in average selling prices in 2026 (though described as more favorable than last year), representing a continued modest headwind to margin expansion.
Automotive Shipments Below Peak
Despite strong design wins and bookings, automotive shipments remain ~20% below the company's prior peak; auto expected to be flat to marginally down in Q4 (Chinese New Year seasonality noted).
OpEx Increase from Variable Compensation
Q3 operating expenses were $79 million, up roughly $3 million versus Q2 largely due to variable compensation. Management expects OpEx to increase about 3% sequentially in Q4 (payroll tax resets) and to grow at roughly inflationary rates thereafter.
Normalization of Distributor Inventory Tailwind
Earlier quarters saw POS (sell‑out) exceed sell‑in; in Q3 sell‑in slightly exceeded POS and management expects sell‑in and POS to be roughly in line going forward, removing a prior inventory drawdown tailwind.
Margins Still Below Prior Peak
While gross margin is improving, it remains below prior peak mid‑50s levels (prior peak benefited from higher pricing and volumes); management cited higher costs and the need for mix, volume and supplier cost reductions to further improve margins.
Company Guidance
For the March quarter management guided sales of $230–$240 million (midpoint ≈ +22% year‑over‑year), non‑GAAP gross margin of 49–51% (midpoint implying roughly +440 basis points vs. 2025), operating expenses expected to rise ~3% sequentially (largely payroll tax resets), interest expense of about $5.0 million (including roughly $0.7 million of repricing costs), a tax rate of ~8%, weighted‑average diluted shares of ~186 million, and non‑GAAP EPS of $0.14–$0.18; they also noted a term‑loan repricing of -25 bps to SOFR +175 bps.Allegro MicroSystems Financial Statement Overview
Summary
Mixed fundamentals: modest TTM revenue growth and a manageable balance sheet, supported by improved TTM operating and free cash flow. However, profitability is currently weak and volatile with TTM and FY2025 net losses, making the earnings recovery the key swing factor.Income Statement
TTM (Trailing-Twelve-Months) revenue rose 6.5% and gross margin held roughly steady around the mid‑40% range, showing reasonable product/price resilience. However, profitability remains the key issue: net income is still negative in TTM and the annual 2025 period also showed a meaningful loss, a sharp reversal from strong profits in 2022–2024. Overall, the top line has stabilized, but the earnings profile is currently weak and volatile.54
Neutral
Balance Sheet
Leverage looks manageable with debt at ~0.30x equity in TTM, improved from the annual 2025 level (~0.40x), and equity remains sizable versus the asset base. The main concern is returns: equity returns are negative in TTM and annual 2025, reflecting the recent loss cycle (despite healthy positive returns in 2022–2024). Balance sheet risk appears contained, but profitability needs to normalize to fully support credit quality and valuation.70
Positive
Cash Flow
Cash generation improved materially in TTM, with operating cash flow of ~$148M and free cash flow of ~$121M, sharply higher than annual 2025 levels. That said, cash conversion is not consistently strong across periods and the company’s recent earnings losses create a mismatch where cash flow strength may be timing-driven. Still, the current TTM free cash flow performance provides a meaningful cushion while the income statement recovers.66
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 725.01M | 1.05B | 973.65M | 768.67M | 591.21M |
| Gross Profit | 321.53M | 574.53M | 546.08M | 407.46M | 278.90M |
| EBITDA | 9.17M | 276.94M | 264.49M | 191.77M | 50.68M |
| Net Income | -73.01M | 152.70M | 187.36M | 119.41M | 17.95M |
Balance Sheet | |||||
| Total Assets | 1.42B | 1.53B | 1.18B | 892.62M | 747.68M |
| Cash, Cash Equivalents and Short-Term Investments | 121.33M | 212.14M | 351.58M | 282.38M | 197.21M |
| Total Debt | 368.49M | 275.21M | 42.54M | 41.45M | 25.00M |
| Total Liabilities | 489.86M | 398.89M | 214.34M | 157.26M | 160.81M |
| Stockholders Equity | 929.55M | 1.13B | 965.63M | 734.21M | 585.75M |
Cash Flow | |||||
| Free Cash Flow | 21.96M | 56.94M | 113.43M | 86.19M | 79.90M |
| Operating Cash Flow | 61.91M | 181.72M | 193.21M | 156.13M | 120.57M |
| Investing Cash Flow | -40.82M | -516.72M | -99.70M | -66.27M | -68.25M |
| Financing Cash Flow | -112.06M | 198.88M | -20.00M | -5.31M | -72.19M |
Allegro MicroSystems Technical Analysis
Positive
36.91
Price Trends
28.91
Positive
28.96
Positive
28.99
Positive
Market Momentum
2.00
Negative
70.47
Negative
71.77
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALGM, the sentiment is Positive. The current price of 36.91 is above the 20-day moving average (MA) of 32.39, above the 50-day MA of 28.91, and above the 200-day MA of 28.99, indicating a bullish trend. The MACD of 2.00 indicates Negative momentum. The RSI at 70.47 is Negative, neither overbought nor oversold. The STOCH value of 71.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ALGM.
Allegro MicroSystems Risk Analysis
Allegro MicroSystems disclosed 42 risk factors in its most recent earnings report. Allegro MicroSystems reported the most risks in the "Ability to Sell" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Allegro MicroSystems Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $6.65B | 18.52 | 19.12% | ― | 2.19% | 19.22% | |
69 Neutral | $11.95B | 38.95 | 7.27% | 0.81% | 0.13% | -16.17% | |
69 Neutral | $7.38B | 262.16 | 13.39% | ― | 20.60% | ― | |
68 Neutral | $4.68B | -53.89 | -8.00% | ― | 47.10% | 64.29% | |
66 Neutral | $6.83B | -509.10 | -1.39% | ― | -7.23% | -15.69% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $9.48B | -122.58 | -7.88% | ― | 59.04% | 28.50% |
* Technology Sector Average
ALGM
Allegro MicroSystems
36.91
13.95
60.76%
AMKR
Amkor
48.33
24.69
104.44%
CRUS
Cirrus Logic
130.34
31.04
31.26%
SMTC
Semtech
79.75
16.29
25.67%
SLAB
Silicon Laboratories
142.45
7.66
5.68%
SITM
SiTime Corporation
363.11
158.45
77.42%
Allegro MicroSystems Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Allegro MicroSystems Adds New Term Loan Tranche
Positive
Jan 21, 2026
On January 21, 2026, Allegro MicroSystems, Inc. amended its existing credit agreement to add a new $285 million tranche of term loans maturing on October 31, 2030, primarily to refinance all outstanding term loans issued under a prior amendment, cover related fees and expenses, and support general corporate purposes. The new term loans, which carry no annual amortization and offer the company a choice between a Term SOFR-based rate plus 1.75% or a floating base rate plus 0.75%, effectively extend the company’s debt maturities and may improve financial flexibility by locking in longer-term financing and preserving cash flow, with implications for its capital structure and future borrowing capacity.
The most recent analyst rating on (ALGM) stock is a Buy with a $39.00 price target. To see the full list of analyst forecasts on Allegro MicroSystems stock, see the ALGM Stock Forecast page.
Business Operations and StrategyPrivate Placements and Financing
Allegro MicroSystems Announces New Term Loan Refinancing
Positive
Jan 16, 2026
On January 15, 2026, Allegro MicroSystems, Inc. completed the allocation of a $285 million U.S. dollar-denominated first lien term facility maturing in October 2030, with an expected interest margin of 1.75% over the secured overnight financing rate or 0.75% over the base rate. The company plans to use the proceeds to fully refinance its existing term loans, in a move that could lower its borrowing costs and extend debt maturities, though the refinancing remains subject to customary closing conditions and may not be completed on the terms described or at all, with final terms to be disclosed once the transaction closes.
The most recent analyst rating on (ALGM) stock is a Buy with a $35.00 price target. To see the full list of analyst forecasts on Allegro MicroSystems stock, see the ALGM Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.