Since its debut on the Nasdaq in October 2020, Allegro MicroSystems, Inc. (NASDAQ: ALGM) has given decent returns to its stakeholders. The company’s growing organic revenues, expanding margins, and favorable key industrial trends could continue to make it a hot stock among investors. Shares of Allegro have grown nearly 26% since its listing on October 29, 2020, according to TipRanks.
Headquartered in Manchester, NH, the company is a prominent player in the power and sensing semiconductor solutions space for motion control and energy-efficient systems. It is also a leading supplier of power integrated circuits (ICs) and holds a dominant position in magnetic sensor ICs.
A Snapshot of ALGM’s IPO
Allegro became a member of the Nasdaq exchange after an initial public offering (IPO) of its 28.7 million shares of Class A common stock at $14 per share. Through the IPO, the company raised $320.8 million in net proceeds (after deducting underwriting discounts and estimated offering expenses payable).
Shares of the company closed at $17.7 on October 29, 2020, up 26.4% from the IPO price. ALGM’s stock touched its all-time high closing price of $36.46 in September 2021.
Presently, Allegro MicroSystems commands a market capitalization of $4.26 billion.
Key Growth Catalysts for Allegro
In Fiscal 2022, Allegro witnessed impressive year-over-year net sales growth in its business segments — Automotive (up 34%) & Industrial (up 40%). This growth was supported by the growing uptake of key industry trends like vehicle electrification, advanced driver assistance systems (ADAS), data center efficiency, and efficient motion control.
According to the company, the rapid rate of new design wins and record backlog will act as major growth catalysts in Fiscal 2023. In fact, in the last fiscal year, the company witnessed major design approvals on products with high-growth electric vehicles and ADAS applications.
Further, to significantly expand its addressable market for electric vehicles, solar inverters, data center and 5G power supplies, and broad-market industrial applications, Allegro entered into an agreement to acquire Heyday Integrated Circuits in May.
Also, the company is strongly moving towards its goal of achieving a gross margin of 55%. For full-year Fiscal 2022, the metric came in at 54.1% on a non-GAAP basis.
ALGM Stock Commands a Strong Buy Rating
As per TipRanks, the Street is optimistic about the stock and has a Strong Buy consensus rating based on five Buys. Allegro’s average price forecast of $30.6 signals that the stock may surge nearly 37% from current levels.
ALGM scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the market.
According to TipRanks, hedge funds are Very Positive on the stock, as they have bought 53,800 shares of Allegro in the last three months.
What’s Ahead for ALGM
Allegro looks like a lucrative investment option to pocket handsome returns in the long run. The company has impressed investors by surpassing earnings expectations in six out of seven quarters reported since its listing. Allegro’s strong revenue growth and operational efficiency translating into expanding margins should support its first-quarter Fiscal 2023 earnings results, which the company is slated to report on July 28.
Read full Disclosure
