Value
5.9/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 4.6 |
| Fwd P/E | 4.3 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 28.3x
- ▸PEG: 0.01
ALGM · Why this verdict
Why Allegro MicroSystems (ALGM) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Allegro MicroSystems has posted 26% year-over-year revenue growth with a 9 out of 9 Piotroski financial health score, but the stock has climbed above the analyst consensus price target, leaving no upside buffer and a negative reward-to-risk ratio; concentrated exposure to automotive OEM customers (70.6% of revenues) and high short interest at 12% against 131% implied volatility create a setup that warrants avoiding new entry until a positive reward-to-risk spread re-opens.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue has expanded 26% year-over-year, and the company scores a near-perfect 9 out of 9 on the Piotroski financial health index, signaling broad-based balance-sheet strength across profitability, leverage, and operating efficiency dimensions. Growth breakdown | Revenue growth should remain above 15% year-over-year for two consecutive quarters, and the Piotroski score should stay at 8 or above over the next 12 months. | →Stable |
| CounterGrowth is concentrated in automotive OEM supply chain customers, which represent 70.6% of revenues; any production slowdown or inventory correction within that customer base could rapidly compress the headline growth figure. | ||
Approximately 70.6% of revenues derive from automotive OEM supply chain customers, concentrating the business in a single end market where demand cycles, production schedules, and inventory decisions are largely beyond management's control. Bear case | If diversification proceeds, non-automotive revenue should grow to represent more than 35% of total revenue within 12 months. | →Stable |
| CounterAutomotive electrification is a multi-year shift that continues to increase semiconductor content per vehicle, which could sustain elevated demand even during a normal auto-cycle pause. | ||
The stock is currently trading above the analyst consensus price target, producing a negative reward-to-risk ratio; with no upside headroom remaining from the current price of $55, the geometric setup does not support new entry. Price targets | If analysts upgrade their targets, the consensus price target should rise above $61 — restoring more than 10% upside — before the entry setup becomes constructive. | →Stable |
| CounterHigh-growth semiconductor stocks frequently trade through consensus targets on momentum; a strong earnings print could prompt immediate analyst upgrades that close the gap between the stock and a higher target level. | ||
Short interest at 12% of float combined with implied volatility of 131% indicates significant institutional skepticism; these conditions create a risk of sharp, disorderly moves in either direction around any catalyst. Risk breakdown | If the bear thesis weakens, short interest should fall below 6% of float as shorts cover into improving fundamentals over the next 12 months. | →Stable |
| CounterElevated short interest can rapidly become a tailwind if earnings beat expectations, as forced covering accelerates price appreciation beyond what fundamentals alone would support. | ||
Revenue has expanded 26% year-over-year, and the company scores a near-perfect 9 out of 9 on the Piotroski financial health index, signaling broad-based balance-sheet strength across profitability, leverage, and operating efficiency dimensions.
→StableGrowth breakdown
- Expectation
- Revenue growth should remain above 15% year-over-year for two consecutive quarters, and the Piotroski score should stay at 8 or above over the next 12 months.
CounterGrowth is concentrated in automotive OEM supply chain customers, which represent 70.6% of revenues; any production slowdown or inventory correction within that customer base could rapidly compress the headline growth figure.
Approximately 70.6% of revenues derive from automotive OEM supply chain customers, concentrating the business in a single end market where demand cycles, production schedules, and inventory decisions are largely beyond management's control.
→StableBear case
- Expectation
- If diversification proceeds, non-automotive revenue should grow to represent more than 35% of total revenue within 12 months.
CounterAutomotive electrification is a multi-year shift that continues to increase semiconductor content per vehicle, which could sustain elevated demand even during a normal auto-cycle pause.
The stock is currently trading above the analyst consensus price target, producing a negative reward-to-risk ratio; with no upside headroom remaining from the current price of $55, the geometric setup does not support new entry.
→StablePrice targets
- Expectation
- If analysts upgrade their targets, the consensus price target should rise above $61 — restoring more than 10% upside — before the entry setup becomes constructive.
CounterHigh-growth semiconductor stocks frequently trade through consensus targets on momentum; a strong earnings print could prompt immediate analyst upgrades that close the gap between the stock and a higher target level.
Short interest at 12% of float combined with implied volatility of 131% indicates significant institutional skepticism; these conditions create a risk of sharp, disorderly moves in either direction around any catalyst.
→StableRisk breakdown
- Expectation
- If the bear thesis weakens, short interest should fall below 6% of float as shorts cover into improving fundamentals over the next 12 months.
CounterElevated short interest can rapidly become a tailwind if earnings beat expectations, as forced covering accelerates price appreciation beyond what fundamentals alone would support.
Per-dimension breakdown
Quality
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.5 |
| ROA | 2.0 |
| Gross margin | 5.5 |
| Op margin | 3.9 |
| Net margin | 0.8 |
| Current ratio | 9.3 |
| FCF quality | 10.0 |
| Moat | 6.4 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 729% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
9.4/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 9.4 |
- ▸Strong growth: 28% YoY
Momentum
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.1 |
| MACD | 6.6 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Oversold in uptrend (RSI 29)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.3 |
| Price target | 8.3 |
| erm sentiment | 4.6 |
- ▸Analyst upside: 27%
Insider
6.6/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 7.7 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $1,572,932 (0.020% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.5 |
| quality rank | 2.8 |
| growth rank | 5.2 |
Technical
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.7 |
| support resistance | 6.9 |
| 52w position | 2.0 |
| gap | 5.0 |
Risk (lower is worse)
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.6 |
| days to cover | 7.6 |
| volatility | 0.0 |
| put call | 8.3 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 3.5 |
| debt equity | 8.7 |
- ▸High IV: 83%
- ▸Above max pain $15
- ▸Concentration risks: 1 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.3 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:5.7>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:79d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.7<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.69
Upside
+10.2%
Downside
14.9%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -40% (>40% off 52w high)
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.7>=5.5. Top dim: Growth at 9.4; weakest: Risk (lower is worse) at 4.3. No conviction either direction.
The strongest dimensions are Growth at 9.4, Sentiment at 7.3, and Insider at 6.6; the weakest are Risk (lower is worse) at 4.3, Peer rank at 4.3, and Technical at 5.2. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.69 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Revenue Growth Trajectory
Trip ifRevenue growth falls below 15% year-over-year for 2 consecutive quarters.
- P2Price Above Analyst Target No Upside
Trip ifAnalyst consensus price target rises above $61, restoring more than 10% upside from the current price.
- P3Automotive Oem Concentration Risk
Trip ifNon-automotive revenue grows above 35% of total revenue for 2 consecutive quarters.
- P4Elevated Short Interest High Volatility
Trip ifShort interest falls below 6% of float.