After several weeks of range-bound movement, shares in Allegro MicroSystems, Inc. could enter into a new clear trend. The exit out of the current trading range could be the signal for a return of volatility.
Summary
● Overall, and from a short-term perspective, the company presents an interesting fundamental situation.
Strengths
● The company's earnings per share (EPS) are expected to grow significantly over the next few years according to the consensus of analysts covering the stock.
● The company's EBITDA/Sales ratio is relatively high and results in high margins before depreciation, amortization and taxes.
● The company returns high margins, thereby supporting business profitability.
● Over the last twelve months, the sales forecast has been frequently revised upwards.
● Analysts have consistently raised their revenue expectations for the company, which provides good prospects for the current and next years in terms of revenue growth.
● For several months, analysts have been revising their EPS estimates roughly upwards.
● Analysts covering this company mostly recommend stock overweighting or purchase.
● Considering the small differences between the analysts' various estimates, the group's business visibility is good.
Weaknesses
● The company's valuation in terms of earnings multiples is rather high. Indeed, the firm is getting paid 38.44 times its estimated earnings per share for the ongoing year.
● The company appears highly valued given the size of its balance sheet.
● The valuation of the company is particularly high given the cash flows generated by its activity.
● The appreciation potential seems limited due to the average target prices set by the analysts covering the stock.
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Allegro MicroSystems, Inc. is a global designer, developer, fabless manufacturer, and marketer of sensor integrated circuits (ICs) and application-specific analog power ICs. The Company is a supplier of magnetic sensor IC solutions in the automotive market. Its sensor ICs enable its customers to precisely measure motion, speed, position and current, while its power ICs include high-temperature and high-voltage capable motor drivers, power management ICs, light-emitting diode driver ICs and isolated gate drivers. Its diverse product portfolio provides solutions for the electrification of vehicles, automotive advanced driver assistance systems (ADAS) safety features, automation for Industry 4.0 and power saving technologies for data centers and green energy applications. The Company, through its subsidiary, Crocus Technology, Inc. offers advanced Tunnel Magnetoresistance (TMR) sensor technology solutions to designers and manufacturers of industrial, automotive and consumer electronics.
ALLEGRO MICROSYSTEMS, INC. 
