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Allegro Shares Sink 9% on Soft Q1 Outlook

Published 2024-05-09, 07:32 a/m
© Reuters.

MANCHESTER, NH - Allegro MicroSystems, Inc. (NASDAQ:ALGM) has reported its fourth-quarter earnings, surpassing analyst expectations with an adjusted EPS of $0.25, which is $0.04 higher than the consensus of $0.21.

The company's revenue for the quarter also exceeded estimates, coming in at $240.58 million against the expected $234.96 million. This performance marks a significant achievement for the semiconductor company, driven by robust sales in e-Mobility, leading to a milestone fiscal year with over $1 billion in sales and a record adjusted EPS of $1.35.

Despite the strong fourth-quarter results, Allegro's stock plummeted by 8% due to a disappointing outlook for the first quarter of fiscal year 2025. The company's guidance for Q1 2025 adjusted EPS is set at a mere $0.01 to $0.03, starkly below the analyst consensus of $0.17.

Revenue forecasts are also lower than expected, with projections ranging from $160 million to $170 million, compared to the consensus estimate of $214.3 million. This significant guidance shortfall has raised concerns among investors, triggering the stock's downward movement.

President and CEO Vineet Nargolwala credited the year's success to the Allegro team and highlighted the expansion of their product portfolio, including the integration of TMR technology and the launch of high voltage isolated gate drivers.

Looking forward, Nargolwala stated, "Our first quarter guide comprehends working closely with customers to manage orders to reduce inventory in the channel and return to normalized business levels. We continue to expect a return to sequential growth in the second quarter."

Allegro's business outlook reflects a strategic approach to inventory management and a focus on returning to normal business operations. The company's confidence in future growth is supported by a record level of design wins and ongoing customer engagements.

Additionally, Allegro has made a voluntary $50 million payment on its term loan, which is anticipated to decrease annualized interest expenses by roughly $4 million, potentially improving future financial performance.

Investors and analysts will be closely monitoring Allegro's progress as it navigates the inventory adjustments and works towards achieving its growth expectations in the coming quarters.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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