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ALGM’s shares have been suffering from lower consumer demand in the industrial and automotive end markets along with stiff competition and a challenging macroeconomic environment.
However, its continued efforts to rebalance inventory across the end markets coupled with an expanding portfolio is noteworthy.
But do these efforts make ALGM stock attractive for investors? Let’s analyze.
Allegro MicroSystems’ expanding portfolio is helping it to penetrate markets like AI-related data centers, automotive powertrain systems and clean energy systems.
ALGM recently introduced two new XtremeSense TMR sensors, the CT455 and CT456, designed to enhance high-power density applications. These advanced sensors offer high-bandwidth and low-noise performance, which significantly improves energy efficiency and precision in current measurements. These are ideal for AI data centers and automotive powertrain systems.
ALGM’s latest ACS37220 is a high-power current sensor while ACS37041 stands out as the smallest leaded magnetic current sensor in the market. These new products represent a significant advancement over traditional discrete shunt resistors and operational amplifiers.
The new ACS37220 and ACS37041 are single-package sensors engineered to consolidate the functions of multiple components, offering enhanced reliability, efficiency, and reduced space requirements.
ALGM has also expanded its High Voltage Power-Thru portfolio with the introduction of the Power-Thru combo chip. This new solution includes the AHV85000 and AHV85040 isolated gate-driver ICs, which, when paired with external transformers, offer designers greater flexibility and enhanced power efficiency.
These latest solutions are ideal for clean energy applications such as solar inverters, xEV charging infrastructures, energy storage systems and data center power supply units.
ACS37030 and ACS37032 are its new high-bandwidth current sensors. These sensors support high-performance power conversion using GaN and SiC technologies, making them ideal for applications in electrified vehicles, clean energy solutions and data centers.
Allegro MicroSystems has expanded its Isolated Gate Driver Portfolio with the introduction of the AHV85111 Bipolar-Output Power-Thru IC. This new isolated gate-driver IC enhances safety features and simplifies the design of high-power energy conversion systems for e-Mobility and clean energy applications, including on-board chargers, DC-DC converters, solar inverters and data center power supplies.
Near-Term Headwinds Hurts ALGM Stock’s Prospects
A significant portion of Allegro’s revenue comes from selling magnetic sensors and power ICs to the automotive sector, particularly in the electric vehicle space. This compels ALGM to be highly dependent on the automotive market.
However, a Goldman Sachs report suggesting that the global EV market is experiencing a slow rate of growth could pose challenges for Allegro.
Allegro operates in an intensely competitive industry, which remains a major concern. It faces stiff competition from Analog Devices (ADI - Free Report) , Monolithic Power Systems (MPWR - Free Report) and Texas Instruments (TXN - Free Report) in both magnetic sensor and power IC segments.
Analog Devices offers a range of magnetic sensors, including the ADAF1080, ADA4570-2, and ADA4571, as well as power ICs such as the ADP5070 and ADP5071. Texas Instruments provides magnetic sensors like the TMAG5233 and TMCS1133-Q1 alongside power ICs, including the TPS65251 and TPS65261. Monolithic also offers a selection of magnetic sensors, including the MPX5700 and MPXH6300, and power ICs such as the MPQ4569 and MPQ4572.
What Investors Should Do with ALGM Stock?
Allegro MicroSystems is actively expanding its portfolio with innovative products to strengthen its position in the chip manufacturing industry.
A challenging outlook for growth in the EV sector, which is a key market for ALGM, raises concerns about the company’s near-term prospects. Sluggish customer demand in the industrial end-market is a headwind.
For second-quarter fiscal 2025, ALGM expects total revenues to be between $182 million and $192 million.
The Zacks Consensus Estimate for second-quarter fiscal 2025 revenues is pegged at $187.1 million, indicating a decline of 32.09% year over year.
The consensus mark for earnings is currently pegged at 6 cents per share, which has remained unchanged in the past 30 days.
The ALGM stock is not so cheap, as the Value Style Score of F suggests a stretched valuation at this moment.
Image: Bigstock
Allegro MicroSystems Down 30% YTD: How Should You Play the Stock?
Allegro MicroSystems (ALGM - Free Report) shares have declined 30.2% year to date (YTD), underperforming the Zacks Electronics - Semiconductors industry’s return of 20.4% and the Zacks Computer and Technology sector’s appreciation of 17.6%.
ALGM’s shares have been suffering from lower consumer demand in the industrial and automotive end markets along with stiff competition and a challenging macroeconomic environment.
However, its continued efforts to rebalance inventory across the end markets coupled with an expanding portfolio is noteworthy.
But do these efforts make ALGM stock attractive for investors? Let’s analyze.
Allegro MicroSystems, Inc. Price and Consensus
Allegro MicroSystems, Inc. price-consensus-chart | Allegro MicroSystems, Inc. Quote
ALGM Expands Portfolio with New Sensors
Allegro MicroSystems’ expanding portfolio is helping it to penetrate markets like AI-related data centers, automotive powertrain systems and clean energy systems.
ALGM recently introduced two new XtremeSense TMR sensors, the CT455 and CT456, designed to enhance high-power density applications. These advanced sensors offer high-bandwidth and low-noise performance, which significantly improves energy efficiency and precision in current measurements. These are ideal for AI data centers and automotive powertrain systems.
ALGM’s latest ACS37220 is a high-power current sensor while ACS37041 stands out as the smallest leaded magnetic current sensor in the market. These new products represent a significant advancement over traditional discrete shunt resistors and operational amplifiers.
The new ACS37220 and ACS37041 are single-package sensors engineered to consolidate the functions of multiple components, offering enhanced reliability, efficiency, and reduced space requirements.
ALGM has also expanded its High Voltage Power-Thru portfolio with the introduction of the Power-Thru combo chip. This new solution includes the AHV85000 and AHV85040 isolated gate-driver ICs, which, when paired with external transformers, offer designers greater flexibility and enhanced power efficiency.
These latest solutions are ideal for clean energy applications such as solar inverters, xEV charging infrastructures, energy storage systems and data center power supply units.
ACS37030 and ACS37032 are its new high-bandwidth current sensors. These sensors support high-performance power conversion using GaN and SiC technologies, making them ideal for applications in electrified vehicles, clean energy solutions and data centers.
Allegro MicroSystems has expanded its Isolated Gate Driver Portfolio with the introduction of the AHV85111 Bipolar-Output Power-Thru IC. This new isolated gate-driver IC enhances safety features and simplifies the design of high-power energy conversion systems for e-Mobility and clean energy applications, including on-board chargers, DC-DC converters, solar inverters and data center power supplies.
Near-Term Headwinds Hurts ALGM Stock’s Prospects
A significant portion of Allegro’s revenue comes from selling magnetic sensors and power ICs to the automotive sector, particularly in the electric vehicle space. This compels ALGM to be highly dependent on the automotive market.
However, a Goldman Sachs report suggesting that the global EV market is experiencing a slow rate of growth could pose challenges for Allegro.
Allegro operates in an intensely competitive industry, which remains a major concern. It faces stiff competition from Analog Devices (ADI - Free Report) , Monolithic Power Systems (MPWR - Free Report) and Texas Instruments (TXN - Free Report) in both magnetic sensor and power IC segments.
Analog Devices offers a range of magnetic sensors, including the ADAF1080, ADA4570-2, and ADA4571, as well as power ICs such as the ADP5070 and ADP5071. Texas Instruments provides magnetic sensors like the TMAG5233 and TMCS1133-Q1 alongside power ICs, including the TPS65251 and TPS65261. Monolithic also offers a selection of magnetic sensors, including the MPX5700 and MPXH6300, and power ICs such as the MPQ4569 and MPQ4572.
What Investors Should Do with ALGM Stock?
Allegro MicroSystems is actively expanding its portfolio with innovative products to strengthen its position in the chip manufacturing industry.
A challenging outlook for growth in the EV sector, which is a key market for ALGM, raises concerns about the company’s near-term prospects. Sluggish customer demand in the industrial end-market is a headwind.
For second-quarter fiscal 2025, ALGM expects total revenues to be between $182 million and $192 million.
The Zacks Consensus Estimate for second-quarter fiscal 2025 revenues is pegged at $187.1 million, indicating a decline of 32.09% year over year.
The consensus mark for earnings is currently pegged at 6 cents per share, which has remained unchanged in the past 30 days.
The ALGM stock is not so cheap, as the Value Style Score of F suggests a stretched valuation at this moment.
Allegro MicroSystems currently carries Zacks Rank #4 (Sell), suggesting that it may be wise to stay away from the stock. You can see the complete list of today’s Zacks #1 Rank stocks here.