Allegro MicroSystems Adjusts Revenue Forecast to $205-$215 Million, Consistent with Market Consensus

Allegro MicroSystems has revised its revenue forecast for the upcoming quarter to $205-215 million, aligning with market consensus. The company's revenue growth has declined by 28.3% over the past year, but it maintains a gross margin of 44.35%. Allegro's valuation metrics, including a price-to-sales ratio of 8.76 and a price-to-book ratio of 6.71, suggest potential overvaluation. The stock has a neutral market sentiment, with a Relative Strength Index of 49.16 and moving averages close to its 52-week high.

Allegro MicroSystems, Inc. (Nasdaq: ALGM) has revised its revenue forecast for the second quarter of fiscal year 2026 to a range of $205 million to $215 million, aligning with market consensus. This adjustment reflects a notable decline in year-over-year revenue growth, which has decreased by 28.3% over the past year. Despite this, the company maintains a robust gross margin of 44.35%.

The company's President and CEO, Mike Doogue, highlighted the strong performance in both e-Mobility and Industrial and Other segments, with year-over-year growth rates of 31% and 50%, respectively. This growth, however, has not been sufficient to offset the overall decline in revenue. The company's non-GAAP EPS also saw a significant increase, nearly tripling year-over-year, indicating strong operating leverage.

Allegro's valuation metrics suggest potential overvaluation. The company's price-to-sales ratio stands at 8.76, and the price-to-book ratio is 6.71. Despite these metrics, the stock maintains a neutral market sentiment, with a Relative Strength Index of 49.16 and moving averages close to its 52-week high.

The company's focus on cash flow, gross margin improvement, and return on invested capital has been evident in its financial performance. During the first quarter, Allegro generated $51 million in free cash flow, representing 25% of its sales. The company also made voluntary debt repayments totaling $35 million, adding to the $105 million repaid in the prior fiscal year.

Looking ahead, Allegro expects total net sales to be in the range of $205 million to $215 million for the second quarter of fiscal year 2026, representing a net sales growth of 12% year-over-year at the midpoint of this range. The company estimates a gross margin between 48% and 50%, with operating expenses expected to be approximately $73 million. Diluted earnings per share are expected to be between $0.10 and $0.14, up 50% year-over-year at the midpoint.

Allegro's forward-looking statements are subject to various risks and uncertainties, including economic conditions, competition, and integration of acquisitions. The company's reliance on third-party wafer fabrication facilities and suppliers, as well as its exposure to warranty claims and regulatory risks, also pose potential challenges.

References:

[1] https://investors.allegromicro.com/news-releases/news-release-details/allegro-microsystems-reports-first-quarter-2026-results