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Assessing Allegro MicroSystems (ALGM) Valuation After Bullish Analyst Consensus Fuels Recent Share Price Uptick

Simply Wall St · 2d ago

Allegro MicroSystems (ALGM) rose about 4% after Wall Street largely lined up on the bullish side, with a clear majority of analysts signaling confidence in the chip designer’s longer term growth story.

See our latest analysis for Allegro MicroSystems.

The latest uptick builds on a solid year to date, with a roughly 28% year to date share price return and a 1 year total shareholder return near 38% pointing to strengthening momentum as confidence in Allegro’s growth story improves.

If this kind of renewed optimism in semis has your attention, it could be a good moment to explore high growth tech and AI stocks for other potential winners.

With the stock still trading at a notable discount to analyst targets but already up strongly this year, investors now face a key question: Is Allegro MicroSystems still undervalued, or has the market already priced in its future growth?

Most Popular Narrative Narrative: 24.3% Undervalued

With Allegro MicroSystems last closing at $29.22 against a narrative fair value of $38.58, the story leans toward meaningful upside if long term forecasts land.

Industrial automation and data center markets are rebounding, with design wins and expanding content in high-growth sectors (data center cooling, robotics, automation), indicating increasing demand for Allegro's advanced sensors and power ICs; this should drive higher revenues and incremental margin improvements as secular demand trends strengthen.

Read the complete narrative.

Want to see what is really powering that upside case? This narrative leans on rapid revenue compounding, a sharp margin reset, and a bold future earnings multiple. Curious how those moving parts stack together over time and still clear a double digit discount rate hurdle? The full breakdown reveals the exact growth path that would need to unfold.

Result: Fair Value of $38.58 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this upside case could falter if competition from China intensifies or auto demand softens, which could limit Allegro’s pricing power and scale benefits.

Find out about the key risks to this Allegro MicroSystems narrative.

Build Your Own Allegro MicroSystems Narrative

If you see the story differently or want to stress test your own assumptions, you can build a custom view in just a few minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Allegro MicroSystems.

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Before the next move in Allegro hits your feed, lock in an edge by scanning curated opportunities that match your strategy instead of hoping the market hands them to you.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.