Core Viewpoint - Allegro MicroSystems, Inc. is well-positioned to continue its earnings-beat streak in upcoming reports, having surpassed earnings estimates consistently in recent quarters [1][5]. Earnings Performance - In the last reported quarter, Allegro MicroSystems achieved earnings of $0.06 per share, exceeding the Zacks Consensus Estimate of $0.05 per share, resulting in a surprise of 20.00% [2]. - In the previous quarter, the company was expected to post earnings of $0.06 per share but delivered $0.07 per share, yielding a surprise of 16.67% [2]. Earnings Estimates and Predictions - Recent estimates for Allegro MicroSystems have been trending higher, with a positive Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat [5][8]. - The current Earnings ESP for Allegro MicroSystems is +5.88%, suggesting increased analyst optimism regarding its near-term earnings potential [8]. Statistical Insights - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have historically produced a positive surprise nearly 70% of the time, indicating a high probability of beating consensus estimates [6][8]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [7].

Group 1 - Allegro MicroSystems, Inc. (ALGM) is a notable stock within the Computer and Technology sector, which ranks 5 among 16 sector groups according to the Zacks Sector Rank [2] - The Zacks Rank for ALGM is currently 2 (Buy), indicating a positive analyst sentiment with a 21.8% increase in the full-year earnings estimate over the past quarter [3] - Year-to-date, ALGM has achieved a return of approximately 64.4%, significantly outperforming the average gain of 8.2% for the Computer and Technology sector [4] Group 2 - ALGM is part of the Electronics - Semiconductors industry, which consists of 44 companies and currently ranks 143 in the Zacks Industry Rank, with the industry gaining about 14.9% year-to-date [5] - Another stock in the Computer and Technology sector, Jabil (JBL), has also outperformed the sector with a year-to-date increase of 57.1% and holds a Zacks Rank of 1 (Strong Buy) [4][5] - The Electronics - Manufacturing Services industry, to which Jabil belongs, has seen a year-to-date increase of 47.6% and is currently ranked 47 [6]

Company Overview - Allegro MicroSystems, Inc. (ALGM) currently holds a Momentum Style Score of B and a Zacks Rank of 2 (Buy) [3][4] - The company has shown strong performance in the semiconductor industry, with shares up 8.06% over the past week compared to the Zacks Electronics - Semiconductors industry, which is up 1.65% [6] - Over the past month, ALGM's price change is 24.66%, significantly outperforming the industry's 7.22% [6] Price Performance - In the last three months, ALGM shares have risen 24.37%, while in the past year, they are up 17.08% [7] - In comparison, the S&P 500 has only moved 6.01% and 13.18% over the same periods [7] Trading Volume - The average 20-day trading volume for ALGM is 1,693,278 shares, indicating a bullish trend as the stock is rising with above-average volume [8] Earnings Outlook - Over the past two months, 2 earnings estimates for ALGM have moved higher, while 1 has moved lower, resulting in an increase in the consensus estimate from $0.47 to $0.53 [10] - For the next fiscal year, 2 estimates have moved upwards with no downward revisions during the same period [10] Conclusion - Considering the positive momentum indicators and earnings outlook, ALGM is positioned as a promising investment opportunity with a Momentum Score of B [12]

Company Performance - Karooooo Ltd. has returned approximately 4.7% year-to-date, outperforming the average gain of 1.5% in the Computer and Technology sector [4] - The Zacks Consensus Estimate for Karooooo Ltd.'s full-year earnings has increased by 5.5% over the past quarter, indicating a positive earnings outlook [3] - Karooooo Ltd. currently holds a Zacks Rank of 1 (Strong Buy), suggesting strong analyst sentiment [3] Industry Comparison - Karooooo Ltd. is part of the Internet - Software industry, which has an average year-to-date gain of 12.9%, indicating that Karooooo Ltd. is slightly underperforming its industry [6] - In contrast, Allegro MicroSystems, Inc., which is in the Electronics - Semiconductors industry, has a year-to-date return of 42.1% and a Zacks Rank of 2 (Buy) [4][5][7] - The Electronics - Semiconductors industry has gained 6.1% since the beginning of the year, ranking 82 among 45 stocks [7]

Core Viewpoint - Allegro MicroSystems, Inc. (ALGM) shows potential as a strong investment opportunity due to significant revisions in earnings estimates, indicating an improving earnings outlook and a positive stock trend [1][9]. Earnings Estimate Revisions - Analysts have shown growing optimism regarding Allegro MicroSystems' earnings prospects, reflected in upward revisions of earnings estimates, which typically correlate with stock price movements [2]. - For the current quarter, the earnings estimate is projected at $0.09 per share, marking a year-over-year increase of +200%. The Zacks Consensus Estimate has risen by 11.11% over the last 30 days, with one estimate moving higher and no negative revisions [5]. - For the full year, the expected earnings are $0.53 per share, representing a year-over-year change of +120.83%. The consensus estimate has increased by 10.47% due to one upward revision and no negative changes [6][7]. Zacks Rank - Allegro MicroSystems currently holds a Zacks Rank 2 (Buy), indicating favorable conditions for investment based on promising estimate revisions. Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have historically outperformed the S&P 500 [8]. Stock Performance - The stock has gained 18.2% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects, suggesting it may be a timely addition to investment portfolios [9].

Technical Analysis - Allegro MicroSystems, Inc. (ALGM) has reached a key level of support, indicating a potential investment opportunity [1] - A "golden cross" has occurred, with ALGM's 50-day simple moving average crossing above its 200-day simple moving average, suggesting a potential bullish breakout [1] - The golden cross pattern is characterized by a short-term moving average breaking above a long-term moving average, typically indicating stronger breakouts [1] Stock Performance - ALGM shares have increased by 11.2% over the past four weeks, indicating positive momentum [3] - The company currently holds a 2 (Buy) rating on the Zacks Rank, suggesting it may be poised for further breakout [3] Earnings Outlook - There have been no earnings estimate cuts for the current quarter, with two revisions higher in the past 60 days, indicating a positive earnings outlook [3] - The Zacks Consensus Estimate for ALGM has also increased, further solidifying the bullish case for the company [3] Investment Consideration - Given the technical indicators and positive earnings estimates, ALGM should be considered for inclusion on investors' watchlists [5]

Financial Data and Key Metrics Changes - Allegro Microsystems has seen a significant decline in industrial sales, which dropped about 35% during the last six quarters due to an inventory correction [19] - The company reported that distributor inventories decreased by 25% compared to the beginning of the fiscal year [54] - Gross margins are currently below 50%, with a focus on returning to the 50% range in the near term [69] Business Line Data and Key Metrics Changes - Automotive sales account for approximately 75% of overall sales, with e-mobility (ADAS applications and XEV powertrain) representing about half of that segment, growing at a mid-teens growth rate [7][8] - The industrial segment represents about 25% of sales, primarily sold through distributors, with historical applications in clean energy and industrial automation [18][20] - The isolated gate driver technology is expected to provide a content uplift opportunity of about $30 to $40 in automotive and up to $425 in AI server racks [27][28] Market Data and Key Metrics Changes - China is the largest market for Allegro, accounting for 27% of shipments, with a significant portion being re-exported [12][13] - Japan contributes about 20% of sales, North America 15%, and Europe 13% [14] - The company has a well-distributed market presence, serving almost all tier one automotive makers in the Western world [14] Company Strategy and Development Direction - The company aims to leverage its distribution channels more efficiently and has hired a new SVP of sales focused on industrial and power sectors [26] - Allegro is committed to innovation within a spending envelope, focusing on operational efficiency and cost management [48] - The company plans to continue exploring organic growth opportunities while remaining open to strategic acquisitions that align with its core competencies [80] Management's Comments on Operating Environment and Future Outlook - Management has not observed significant changes in customer order patterns despite ongoing geopolitical issues [50] - The focus remains on executing new product sales and improving gross margins above 50% [46][70] - The company is optimistic about the growth potential in the robotics sector, particularly humanoid robotics, which could match automotive content opportunities [22] Other Important Information - Allegro recently underwent a CEO change, appointing Mike Dug, who has been with the company for nearly 28 years, as the new CEO [41] - The company plans to hold an Analyst Day following its fifth anniversary as a public company to reintroduce its leadership team and clarify its strategy [83] Q&A Session Summary Question: How does Allegro's exposure to China compare to other markets? - China accounts for 27% of Allegro's shipments, with a significant portion being re-exported, while Japan is about 20%, North America 15%, and Europe 13% [12][14] Question: What are the key growth drivers in the industrial segment? - The industrial segment has been historically focused on clean energy and automation, with new opportunities in medical and AI data centers [20][21] Question: What is the company's strategy regarding acquisitions? - Allegro is focused on organic growth but remains open to strategic acquisitions that align with its technology and market needs [80]

Company Overview - Allegro MicroSystems, Inc. (ALGM) is currently experiencing significant attention from investors due to high implied volatility in the options market, particularly the June 20, 2025 $12.50 Put option [1] - The company holds a Zacks Rank 2 (Buy) in the Electronics - Semiconductors industry, which is positioned in the Bottom 48% of the Zacks Industry Rank [3] Analyst Insights - Over the past 60 days, one analyst has raised earnings estimates for the current quarter, increasing the Zacks Consensus Estimate from earnings of 7 cents per share to 8 cents per share [3] - The current sentiment among analysts indicates a potential for a significant price movement in Allegro MicroSystems shares, as reflected by the high implied volatility [4] Options Market Dynamics - High implied volatility suggests that investors are anticipating a major price movement, which could be due to an upcoming event that may trigger a rally or sell-off [2] - Options traders often seek to capitalize on high implied volatility by selling premium, aiming for the underlying stock to not move as much as expected by expiration [4]

Company Overview - The company ships approximately 1.5 billion units annually to over 10,000 customers worldwide, with a portfolio of more than 1,500 products[24]. - The company’s product portfolio includes over 1,500 products, focusing on high-performance analog mixed-signal semiconductors, including magnetic sensor ICs and power ICs[65]. - The company employed approximately 4,060 full-time employees as of March 28, 2025, with 750 in research and development and 2,800 in operations and quality[100]. - Approximately 2,300 employees hold university and graduate-level degrees, with 990 located outside of factory locations, indicating a highly educated workforce[102]. - The company has a global footprint with 29 locations across four continents, with its primary internal assembly and testing facility located in Manila, Philippines, covering approximately 434,000 square feet[200]. Market Position and Strategy - The company is a leading provider of sensing and power solutions for vehicle electrification, with a focus on improving efficiency to comply with emissions regulations[31]. - The company aims to significantly expand its Served Available Market (SAM) by increasing semiconductor content per vehicle, particularly in the automotive sector, which is expected to see a meaningful increase due to technology shifts[51]. - The company plans to grow its magnetic sensor market share through the release of more products based on XtremeSense TMR technology[48]. - The company is leveraging its power IC products to increase total content within automotive and industrial applications, focusing on electrification and energy efficiency[49]. - The company is targeting adjacent growth markets by applying its intellectual property and technology, particularly in automotive applications and industrial clean energy[61]. Financial Performance - The company achieved approximately 50.7% of its net sales through distributors in fiscal year 2025, down from 52.9% in 2024 and 39.3% in 2023[76]. - The company has experienced a downturn in market demand over the past several quarters, primarily due to softening demand from customers and excess inventory digestion[98]. - The company’s net sales have historically been higher in the second half of the fiscal year compared to the first half, influenced by market conditions and product introductions[97]. - The average selling prices (ASPs) of products are generally declining, which may adversely affect gross margins and necessitate cost reductions[133]. - The company has experienced fluctuations in quarterly net sales and operating results, making accurate forecasting challenging[136]. Research and Development - As of March 28, 2025, the company had approximately 750 employees dedicated to research and development, with a nearly doubled intellectual property portfolio over the last three years[83]. - The company is investing in research and development focused on product design and automotive-grade technologies to maintain a competitive advantage in high-growth areas such as e-Mobility and clean energy[56]. - The company owns 1,942 active patents, including 966 U.S. patents, with expiration dates between 2025 and 2043, and has 487 pending patent applications[92]. Sustainability and ESG Efforts - The company is committed to sustainability efforts, focusing on energy efficiency and reducing emissions through its product portfolio while maintaining social responsibility in its operations[64]. - The company has implemented several energy, water, and waste reduction projects across its facilities as part of its ESG strategy[73]. - The company is a member of the Responsible Business Alliance, ensuring compliance with labor, human rights, and environmental standards among its suppliers[74]. Competition and Market Risks - The company faces intense competition and must continuously innovate to maintain its market position against competitors with greater resources[96]. - The company is exposed to risks from geopolitical changes, particularly in China-Taiwan relations, which could disrupt operations at wafer fabrication facilities[126]. - The cyclical nature of the semiconductor industry may limit the company's ability to maintain or improve net sales and profitability, with current downturns attributed to weak demand and excess inventory[130]. - The company faces risks from potential disruptions in the automotive market, which could negatively impact future growth and demand for products[131]. Employee Engagement and Management - The company’s engagement score for fiscal year 2025 is on par with industry benchmarks, indicating high employee satisfaction and pride in the organization[107]. - Employee turnover rates are closely monitored, with efforts to decrease voluntary turnover and increase retention through competitive compensation and development opportunities[106]. - The company has implemented key recruitment and retention strategies to attract top talent, including partnerships with colleges and universities[105]. Cybersecurity and IT Risks - The company has implemented a cybersecurity risk management program integrated into its overall enterprise risk management program, with key elements including risk assessments and a formal IT risk register[193]. - The company's cybersecurity governance includes oversight by the Audit Committee, which receives periodic reports on cybersecurity risks and incidents[195]. - The Chief Digital and Information Officer, with over 30 years of experience in information technology, is responsible for the overall cybersecurity risk management program[197]. Financial Liabilities and Capital Management - The company has $345.0 million in aggregate principal amount of debt outstanding as of March 28, 2025, with an additional $256.0 million of borrowings available under its revolving credit facility[167]. - The company may seek to sell additional equity or debt securities if capital resources are insufficient, leading to potential dilution for stockholders[166]. - The company must maintain a Total Net Leverage Ratio of no more than 4.00 to 1.00, which may limit its operational flexibility[168]. Future Outlook and Opportunities - The company anticipates growth in the automotive and industrial sectors, particularly with the increasing adoption of HEVs and EVs, which are expected to have higher sensor and power product content[146]. - The company is exploring new market opportunities in artificial intelligence, medical devices, and robotics, aiming to expand its addressable markets[149]. - End-user demand for HEVs, EVs, and green energy products is often dependent on government incentives, and any reduction or elimination of these incentives could negatively affect demand for the company's products[161].

Core Insights - Allegro MicroSystems, Inc. (ALGM) shows potential as a strong investment due to significant revisions in earnings estimates, indicating an improving earnings outlook [1][9] - Analysts exhibit growing optimism regarding Allegro's earnings prospects, which is expected to positively influence its stock price [2] - The Zacks Rank system, which evaluates stocks based on earnings estimate revisions, indicates that Allegro MicroSystems has a favorable ranking, suggesting strong future performance [3][8] Current-Quarter Estimate Revisions - The earnings estimate for the current quarter is $0.08 per share, reflecting a substantial increase of +166.67% compared to the previous year [5] - The Zacks Consensus Estimate for the current quarter has risen by 100% over the last 30 days, with no negative revisions reported [5] Current-Year Estimate Revisions - For the full year, the earnings estimate stands at $0.50 per share, representing an increase of +108.33% from the prior year [6] - The consensus estimate has seen a boost of 10.26% over the past month, with two estimates moving higher and only one negative revision [6][7] Zacks Rank and Performance - Allegro MicroSystems has achieved a Zacks Rank 2 (Buy), indicating strong potential for outperformance based on earnings estimate revisions [8] - Historical data shows that stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500 [8] Stock Performance - The stock has experienced a notable gain of 52.3% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects [9]