Allegro MicroSystems (ALGM) Stock Forecast & Price Target

Allegro Microsystems Inc is poised for a positive financial trajectory as demand for its sensor and power ICs continues to improve, with bookings reaching their highest levels in eight quarters and increasing by 50% year-over-year in F3Q25. The company's transition to an asset-lite model is expected to enhance profit margins, coupled with a favorable inventory environment where OEMs are transitioning from excess inventory to a shortage. Furthermore, Allegro is well-positioned to capture additional market share in the automotive and industrial sectors through its comprehensive motor control solutions, particularly as adoption of advanced driver-assistance systems (ADAS) and electric vehicles (xEV) expands.

Allegro Microsystems Inc. has reported disappointing financial guidance for the fourth quarter of fiscal year 2025, projecting revenues of $185 million, which reflect a significant year-over-year decline of 23.1%, and fall short of both internal and market estimates. The company's gross margin is expected to decrease to 47%, substantially below earlier expectations and signaling potential challenges in maintaining profitability, particularly given the projected decline in automotive sales and intensified competition within the industry. Additionally, while cancellations have reached all-time lows, the ongoing downward trend in average selling prices and the anticipated gross margin fluctuations contribute to a negative outlook for the company's financial performance moving forward.