Loop Capital raises Allegro MicroSystems stock price target to $42 from $28
Investing.com
Published Jul 09, 2025 08:05AM ET
Investing.com - Loop Capital raised its price target on Allegro (WA:ALEP) MicroSystems (NASDAQ:ALGM) to $42.00 from $28.00 on Wednesday, while maintaining a Buy rating on the stock. The new target comes as ALGM trades near its 52-week high of $36.55, having delivered an impressive 53.5% return over the past six months. According to InvestingPro analysis, the stock currently appears overvalued based on its Fair Value calculations.
The price target increase represents a 50% upside from the previous target, with Loop Capital's analysis based on approximately 80 times the firm's next-twelve-month non-GAAP earnings per share estimates.
Loop Capital acknowledged that while ALGM shares may not appear cheap at this valuation, the next-twelve-month forecast period represents more of a cyclical trough rather than normalized conditions for the semiconductor company.
The firm also noted that Allegro's acquisition of Crocus, which closed on October 31, 2023, continues to have some residual EPS dilutive impact over the next twelve months.
Loop Capital's $42 price target assumes Allegro shares will trade at 40 times the firm's fiscal year 2027 estimates of $1.05 in non-GAAP EPS, which the analyst views as more representative of normalized cyclical conditions.
In other recent news, Allegro MicroSystems reported better-than-expected fourth-quarter results, leading to a positive response from investors. The company posted adjusted earnings per share of $0.06, surpassing analyst estimates of $0.05, with revenue reaching $192.82 million, exceeding the consensus forecast of $185.36 million. While revenue declined by 19.9% compared to the same quarter last year, the company remains optimistic about future growth. Allegro provided strong guidance for the first quarter of fiscal 2026, projecting revenue between $192 million and $202 million, which implies an 18% year-over-year growth at the midpoint. Adjusted earnings per share are expected to range from $0.06 to $0.10, surpassing the consensus estimate of $0.07.
Additionally, BofA Securities resumed coverage of Allegro MicroSystems with a Buy rating and a price target of $38.00, indicating a potential 33% upside. The firm highlighted Allegro's leadership in magnetic sensors for electric vehicles and advanced driver assistance systems, along with growth opportunities in power management chips. Despite current subdued automotive demand, BofA anticipates a cyclical recovery that could benefit Allegro, projecting a 13% sales compound annual growth rate and a 46% profit-EPS compound annual growth rate from 2024 through 2027. These projections are noted to be significantly higher than Allegro's industry peers.
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Written By: Investing.com
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