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]

Group 1 - Automatic Data Processing (ADP) is part of the Computer and Technology sector, which includes 607 stocks and has a Zacks Sector Rank of 7, indicating its relative strength among sectors [2] - ADP currently holds a Zacks Rank of 2 (Buy), suggesting a favorable outlook based on earnings estimate revisions and improving earnings outlooks [3] - The Zacks Consensus Estimate for ADP's full-year earnings has increased by 0.5% in the past quarter, reflecting stronger analyst sentiment and an improving earnings outlook [4] Group 2 - Year-to-date, ADP has increased by approximately 9.1%, while the average performance of stocks in the Computer and Technology group has declined by about 1.2%, indicating ADP's outperformance [4] - ADP is categorized under the Internet - Software industry, which consists of 167 companies and has an average gain of 8.9% this year, further highlighting ADP's strong performance within its industry [6] - In comparison, Allegro MicroSystems, Inc. (ALGM), another outperforming stock in the Computer and Technology sector, has risen by 25.9% year-to-date, with a Zacks Rank of 2 (Buy) [5]

Group 1 - Allegro MicroSystems, Inc. is highlighted as an automotive chipmaker with a positive outlook, suggesting a Buy rating for long-term investors [1] - The article emphasizes the importance of using market pullbacks as an opportunity to invest in Allegro MicroSystems [1] - The author has a background in technology analysis and is now also covering commodities and energy sectors, indicating a broad investment perspective [1]

Core Viewpoint - Allegro MicroSystems, Inc. will present at TD Cowen's 53rd Annual Technology, Media & Telecom Conference on May 29, 2025, highlighting its role in power and sensing semiconductor solutions for motion control and energy-efficient systems [1] Company Overview - Allegro MicroSystems, Inc. has over three decades of expertise in magnetic sensing and power integrated circuits (ICs), focusing on automotive, clean energy, and industrial automation [3] - The company emphasizes enhancing efficiency, performance, and sustainability through its solutions, reinforcing its status as a pioneer in "automotive grade" technology [3]

MAY 8, 2025 4QFY25 Investor Presentation This presentation may not be reproduced, forwarded to any person or published, in whole or in part. 2 4Q Financial & Business Update Company Overview Appendix ALLEGRO'S VALUES Introduction to our New CEO Forward-looking statements This presentation and the accompanying oral remarks contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor pr ...

Core Viewpoint - Allegro MicroSystems, Inc. reported better-than-expected fourth-quarter financial results and provided first-quarter sales guidance above market estimates [1][2]. Financial Performance - The company posted adjusted earnings of $0.06 per share, surpassing market expectations of $0.05 per share [1][2]. - Quarterly sales reached $192.82 million, exceeding expectations of $185.28 million, representing an 8% sequential increase [1][2]. Future Guidance - For the first quarter, Allegro expects adjusted earnings between $0.06 and $0.10 per share, with sales projected between $192 million and $202 million [2]. Market Reaction - Following the earnings announcement, Allegro MicroSystems shares increased by 12.7%, closing at $21.07 [3]. Analyst Ratings - Needham analyst Quinn Bolton maintained a Buy rating on Allegro, lowering the price target from $30 to $25 [8]. - Barclays analyst Blayne Curtis maintained an Overweight rating, raising the price target from $22 to $23 [8].