Allegro MicroSystems (ALGM) Stock Forecast & Price Target

Allegro Microsystems is poised for a positive financial outlook, reflected in its expectation to expand margins as it transitions to an asset-lite model. Notably, the company has experienced significant growth in demand, with bookings reaching their highest levels in eight quarters and increasing by 50% year-over-year in F3Q25, while customer inventory levels have shifted from excess to a potential shortage in North America. Additionally, Allegro's strong market position in magnetic sensors is expected to enhance its dollar content per vehicle, driven by the increasing adoption of advanced driver-assistance systems (ADAS) and electric vehicles (xEV), positioning it favorably in the automotive and industrial markets.

The financial outlook for Allegro Microsystems Inc is negative, primarily due to the company's projected revenue of $185.0 million for F4Q25, which represents a 23.1% year-over-year decline and falls short of both internal and market expectations. Gross margin is anticipated to hit a low of 47% for the quarter, significantly below prior estimates, contributing to the overall earnings per share miss, signaling potential profitability challenges. Furthermore, heightened competition from larger players in the market raises concerns regarding Allegro's ability to maintain its market share and sales in the face of declining automotive sales and pressures in the e-mobility sector.