Stock Story -
Chip designer Allegro MicroSystems (NASDAQ:ALGM) will be reporting earnings tomorrow before market open. Here's what to expect.
Allegro MicroSystems beat analysts' revenue expectations by 2.4% last quarter, reporting revenues of $240.6 million, down 10.7% year on year. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its operating margin.
Is Allegro MicroSystems a buy or sell going into earnings? Find out by reading the original article on StockStory, it's free.
This quarter, analysts are expecting Allegro MicroSystems's revenue to decline 40.7% year on year to $165 million, a reversal from the 27.8% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.02 per share.
The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Allegro MicroSystems has only missed Wall Street's revenue estimates once over the last two years, exceeding top-line expectations by 2.2% on average.
Looking at Allegro MicroSystems's peers in the processors and graphics chips segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Qorvo (NASDAQ:QRVO) delivered year-on-year revenue growth of 36.2%, beating analysts' expectations by 4.1%, and AMD (NASDAQ:AMD) reported revenues up 8.9%, topping estimates by 2%.
Read the full analysis of Qorvo's and AMD's results on StockStory.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 thanks to cooling inflation. 2024 has been a different story as mixed signals have led to market volatility, and while some of the processors and graphics chips stocks have fared somewhat better, they have not been spared, with share prices down 7.3% on average over the last month. Allegro MicroSystems is down 20.4% during the same time and is heading into earnings with an average analyst price target of $36.9 (compared to the current share price of $23.5).
