ALGM · Allegro MicroSystems
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $40.74
Note written ·
Price against the kill line
26.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $40.74, on record since 11 November 2026. The shares are down 31.9% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $40.74, just over the 200-day average of closes, which would show the shares leading the S&P 500 again. A fiscal third-quarter 2027 sales result above the $288 million top of the guide would point the same way.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 25 September 2026, filed 30 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 277
- Revenue, change on a year (%)
- +29.2
- Gross margin (%)
- 49.2
- Operating margin (%)
- 12.8
- Free cash flow, four quarters ($M)
- 104
- Net cash, cash less debt ($M)
- −88.3
- Price to earnings (×)
- 181.6
- Enterprise value to sales (×)
- 5.7
All filed numbers
What Allegro MicroSystems reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 277 | +29.2 | 49.2 | 12.8 |
| first filed | 259 | +27.5 | 48.5 | 9.8 |
| first filed | 243 | +26.1 | 47.0 | 2.2 |
| first filed | 229 | +28.9 | 46.7 | 4.2 |
| first filed | 214 | +14.4 | 46.3 | 2.9 |
| first filed | 203 | +21.9 | 44.9 | −1.3 |
| Pre-tax income ($M) | 27.8 |
| Net income ($M) four quarters: 30.9 | 23.3 |
| Diluted shares, change on a year (%) against the quarter to 26 September 2025 | +0.8 |
| Operating cash flow ($M) | 140 |
| Capital spending ($M) | 35.5 |
| Free cash flow ($M) | 104 |
| Cash and short-term investments ($M) | 193 |
| Debt ($M) long-term debt | 281 |
| Net cash, cash less debt ($M) | −88.3 |
| Deferred revenue ($M) at 27 March 2026, filed 21 May 2026 | 0.0 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 109 |
| Inventory ($M) | 182 |
| Shareholders' equity ($M) | 1,002 |
| Market value ($M) | 5,619 |
| Enterprise value, market value plus net debt ($M) | 5,707 |
| Enterprise value to sales (×) | 5.7 |
| Enterprise value to operating income (×) | 75.2 |
| Price to earnings (×) | 181.6 |
| Price to book value (×) | 5.6 |
| Free-cash-flow yield (%) | 1.9 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 5.6% of shares outstanding sold short, 3.4 days of average trading to cover, −8.6% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $5.2M |
The thesis
Allegro MicroSystems is more likely to lag the S&P 500 over the next three months. Operating results beat, but the shares closed at $31.71 on 12 November 2026, 28.6% lower than the $44.39 close of 14 August 2026. Fiscal third-quarter sales, guided at $278–288 million and due around late January 2027, show whether data-center growth is back in view.
Fiscal second-quarter 2027 sales were $276.9 million, up 29% from $214.3 million a year earlier. Management had guided $265–275 million, and the consensus estimate was $270.815 million (Allegro 8-K and Benzinga, 29 October 2026). The results release gives no data-center dollar figure, share of sales or growth rate.
After the report, analysts cut price targets and the shares kept falling, to a close of $26.80 on 5 November 2026. They then recovered to $32.11 on 11 November 2026 and $31.71 on 12 November 2026. Both closes remain below the 50-day average of $34.09 and the 200-day average of $40.73.
Bullish and bearish views on Allegro MicroSystems, Inc.
The bull case on Allegro MicroSystems, Inc. (ALGM), in brief: sales beat the guided range. The bear case: price targets were cut across the board.
Bull case
- Sales beat the guided range. Fiscal second-quarter sales of $276.9 million topped the $275 million high end of guidance. Non-GAAP (adjusted) earnings per share were $0.26 against a $0.24 estimate (Allegro 8-K and Benzinga, 29 October 2026).
- Guidance sits above consensus. Fiscal third-quarter sales are guided to $278–288 million against a $276.553 million estimate. Non-GAAP earnings per share are guided to $0.25–0.29 against $0.26, and non-GAAP gross margin to 51.5–52.5% versus 51.5% reported (Benzinga, 29 October 2026).
- Industrial demand is accelerating. Industrial and Other sales were $104.4 million, up 79% from a year earlier, and Automotive was $172.5 million, up 11% (Allegro 8-K, 29 October 2026). CEO Mike Doogue said forward demand signals "strengthened significantly this quarter" and cited record design wins.
- Cash generation improved. Operating cash flow was $36.8 million against $20.4 million a year earlier. Cash was $193.0 million and total debt about $287.2 million at quarter-end, after a further $25 million voluntary repayment on 30 September 2026 (Allegro 8-K).
- Brokers kept favourable ratings. Evercore ISI (Outperform), Mizuho (Outperform), Wells Fargo (Overweight) and Needham (Buy) held positive ratings while cutting targets (Benzinga, 30 October 2026).
Bear case
- Price targets were cut across the board. Evercore ISI lowered its target to $40 from $53 and Mizuho to $46 from $58. Wells Fargo cut to $40, Barclays (Equal-Weight) to $45 and Needham to $50 (Benzinga, 30 October 2026).
- The shares fell after a beat. The close was $33.03 on 29 October 2026 and $26.80 on 5 November 2026. The shares have since recovered only to $31.71 (12 November 2026), 55.8% below the 52-week intraday high of $71.77 set on 30 June 2026.
- Data-center disclosure is thinner. The fiscal second-quarter release says data center set a record but gives no figure. The forecast that fiscal 2027 data-center revenue more than doubles was last quantified on the 30 July 2026 call, when data center was 17% of sales.
- Most sales are cyclical. About 83% of fiscal first-quarter 2027 sales came from automotive and broad industrial markets (Allegro filings). Automotive grew 11% from a year earlier to $172.5 million in the fiscal second quarter (Allegro 8-K, 29 October 2026).
- GAAP earnings are thin. GAAP diluted earnings per share were $0.12 against $0.26 non-GAAP, and GAAP gross margin was 49.2% against 51.5% non-GAAP (Allegro 8-K, 29 October 2026).
- Insider selling and a large holder. Director Jennie Raubacher sold 1,000 shares at $45.32 on 17 August 2026 (SEC Form 4). Sanken Electric still holds roughly a third of the shares after its 2024 repurchase.
Price setup
The last close is $31.71 (12 November 2026), 55.8% below the 52-week intraday high of $71.77 (30 June 2026). The 52-week closing low is $22.80 on 20 November 2025. The three-month price change is −28.6%.
The shares sit below the 50-day average of $34.09 and well below the 200-day average of $40.73. The close of $26.80 on 5 November 2026 is the low of the post-earnings slide. The $32.11 close on 11 November 2026 is the high of the rebound so far.
The lowest targets among the firms listed above are $40, from Evercore ISI and Wells Fargo (30 October 2026). That is above the last close. The next report falls outside the next 30 days, so no scheduled company event sits in the near window.
Catalysts ahead
- ~29 January 2027 (est.): Fiscal third-quarter 2027 results. Tests the $278–288 million sales guide and whether a data-center figure returns to the release.
What would change the view
A daily close above $40.74, just over the 200-day average of closes, which would show the shares leading the S&P 500 again. A fiscal third-quarter 2027 sales result above the $288 million top of the guide would point the same way.
What it trades with
Allegro trades with analog and auto-exposed chip names and with AI power-supply suppliers. On 18 August 2026 the shares fell 9.6% while a broad chip gauge fell about 5%, so the stock has fallen harder than the group in sell-offs. Industrial and Other growth of 79% ties results to the industrial recovery, and the 11% automotive growth keeps part of the business tied to vehicle production cycles.
The fiscal year ends in late March, so the quarter ended 25 September 2026 lines up with calendar-year peers' third quarter.
The evidence, claim by claim (8)
- Fiscal second-quarter 2027 sales $276.9 million, up 29% from $214.3 million; Automotive $172.5 million (up 11%), Industrial and Other $104.4 million (up 79%); non-GAAP gross margin 51.5%, non-GAAP EPS $0.26. Allegro second-quarter fiscal 2027 results release (Form 8-K) · as of
- Fiscal third-quarter 2027 guidance: sales $278–288 million, non-GAAP gross margin 51.5–52.5%, non-GAAP EPS $0.25–0.29, versus consensus sales of $276.553 million and EPS of $0.26. Allegro results release; Benzinga · as of
- Second-quarter sales of $276.884 million and EPS of $0.26 beat estimates of $270.815 million and $0.24. Benzinga · as of
- Operating cash flow was $36.8 million versus $20.4 million a year earlier; cash $193.0 million and total debt about $287.2 million at quarter-end; further $25 million voluntary repayment on 30 September 2026. Allegro second-quarter fiscal 2027 Form 8-K · as of
- Evercore ISI (Outperform) cut its target to $40 from $53; Mizuho (Outperform) to $46 from $58. Benzinga via Tiger Brokers · as of
- Wells Fargo (Overweight) lowered its target to $40, Barclays (Equal-Weight) to $45 and Needham (Buy) to $50. Benzinga · as of
- Director Jennie Raubacher sold 1,000 shares at $45.32 on 17 August 2026. SEC Form 4 filed 18 August 2026 · as of
- Closed at $31.71, below the 50-day average of $34.09 and 200-day average of $40.73; three-month change −28.6%. Adjusted daily closes · as of
Sources
Related · shared themes
MPWR
Monolithic Power Systems
Monolithic Power Systems' AI server power-chip sales are running ahead of expectations after a Q3 beat and a Q4 guide above consensus, and…
SITM
SiTime
SiTime Corporation's timing chips for AI datacenters beat Q3 2026 expectations with $298.7 million of revenue and guided Q4 to $331-341…
VICR
Vicor
Vicor Corporation's patent royalties lifted third-quarter revenue to $197.1 million, but guidance implies a lower fourth quarter and the…
TXN
Texas Instruments
Texas Instruments' analog upturn, driven by data-center demand and pricing that lifted third-quarter 2026 revenue 28%, gives the shares a…