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StockStory analysed three cash-producing stocks, recommending investors avoid two while highlighting one with stronger prospects. Allegro MicroSystems faces end-market challenges, with flat sales over two years and operating margin falling to 2% over five years. The power management chip designer trades at 37.6x forward P/E. Viavi Solutions showed weak performance with 3.4% annual growth over five years, whilst earnings per share remained flat despite revenue growth. The telecommunications testing company trades at 26.2x forward P/E. Merck emerged as the recommended stock, boasting a 21.5% trailing 12-month free cash flow margin. The pharmaceutical company's portfolio includes the blockbuster cancer immunotherapy Keytruda. The analysis emphasises that strong cash flow alone doesn't guarantee superior returns without efficient capital allocation.

Allegro MicroSystems reported better-than-expected Q2 results, with revenue up 27.5% year on year to $259.2 million. The chip designer's sales beat analyst estimates of $251.4 million. The company posted non-GAAP earnings of $0.23 per share, exceeding consensus estimates of $0.21. Guidance for Q3 revenue was optimistic at $270 million at the midpoint, above analyst expectations of $264.4 million. CEO Mike Doogue said the company delivered its sixth consecutive quarter of sales growth, led by data centre products, which reached a record 17% of total sales, and continued strength in electric vehicles and advanced driver assistance systems. Operating margin improved to 9.8%, up from negative 1.3% in the same quarter last year. However, free cash flow margin declined to 5.4% from 25.1% year on year.

Needham & Company LLC raises Allegro MicroSystems (NASDAQ:ALGM) price target to $57.00. July 30, 2026 Key points. * Needham raised Allegro MicroSystems' price target to $57 from $55 and maintained a "buy" rating, implying roughly 40% upside from the reported $40.59 share price. * Analyst sentiment remains generally positive, with nine buy ratings, two holds and one sell; the consensus view is "Moderate Buy" with an average target of $55.40. * Allegro reported quarterly EPS of $0.23 versus the $0.21 consensus estimate and revenue of $259.24 million, up 27.5% year over year and above forecasts. * Five stocks we like better than Allegro MicroSystems. Allegro MicroSystems (NASDAQ:ALGM - Get Free Report) had its price target increased by equities research analysts at Needham & Company LLC from $55.00 to $57.00 in a research note issued to investors on Thursday,Benzinga reports. The firm currently has a "buy" rating on the stock. Needham & Company LLC's target price would indicate a potential upside of 40.41% from the company's current price. Several other analysts have also recently issued reports on the stock. Wells Fargo & Company upped their target price on shares of Allegro MicroSystems from $48.00 to $56.00 and gave the company an "overweight" rating in a research report on Friday, May 8th. TD Cowen reduced their price objective on Allegro MicroSystems from $70.00 to $66.00 and set a "buy" rating on the stock in a research note on Monday, July 13th. Barclays downgraded Allegro MicroSystems from an "overweight" rating to an "equal weight" rating and set a $48.00 price objective on the stock. in a research report on Monday, July 20th. Jefferies Financial Group reiterated a "buy" rating and issued a $62.00 target price on shares of Allegro MicroSystems in a report on Thursday, May 7th. Finally, Weiss Ratings restated a "sell (d-)" rating on shares of Allegro MicroSystems in a report on Wednesday, May 6th. Nine research analysts have rated the stock with a Buy rating, two have given a Hold rating and one has given a Sell rating to the stock. According to data from MarketBeat.com, the stock currently has a consensus rating of "Moderate Buy" and a consensus target price of $55.40. Allegro MicroSystems price performance. Shares of ALGM stock traded down $1.61 on Thursday, reaching $40.59. The company's stock had a trading volume of 3,720,268 shares, compared to its average volume of 2,628,690. The stock's fifty day simple moving average is $51.97 and its 200-day simple moving average is $42.52. Allegro MicroSystems has a 1 year low of $22.41 and a 1 year high of $71.77. The company has a current ratio of 3.45, a quick ratio of 2.21 and a debt-to-equity ratio of 0.30. The company has a market capitalization of $7.56 billion, a price-to-earnings ratio of -445.86 and a beta of 1.90. Discover more Market Cap Calculator Cryptocurrency News Allegro MicroSystems (NASDAQ:ALGM - Get Free Report) last released its quarterly earnings results on Thursday, July 30th. The company reported $0.23 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.21 by $0.02. Allegro MicroSystems had a negative net margin of 1.67% and a positive return on equity of 6.09%. The company had revenue of $259.24 million for the quarter, compared to the consensus estimate of $251.44 million. During the same quarter in the prior year, the firm earned $0.09 earnings per share. Allegro MicroSystems's revenue was up 27.5% on a year-over-year basis. Allegro MicroSystems has set its Q2 2027 guidance at 0.230-0.260 EPS. Analysts forecast that Allegro MicroSystems will post 0.77 earnings per share for the current fiscal year. Insider transactions at Allegro MicroSystems. In related news, SVP Sharon Briansky sold 8,948 shares of the firm's stock in a transaction dated Monday, May 11th. The shares were sold at an average price of $47.54, for a total value of $425,387.92. Following the transaction, the senior vice president owned 75,232 shares of the company's stock, valued at $3,576,529.28. This trade represents a 10.63% decrease in their position. The transaction was disclosed in a filing with the SEC, which is accessible through the SEC website. Also, Director Susan D. Lynch sold 16,711 shares of Allegro MicroSystems stock in a transaction dated Thursday, May 14th. The shares were sold at an average price of $45.46, for a total transaction of $759,682.06. Following the sale, the director owned 12,805 shares of the company's stock, valued at $582,115.30. The trade was a 56.62% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. In the last quarter, insiders sold 68,607 shares of company stock valued at $3,213,714. Company insiders own 0.50% of the company's stock. Hedge funds weigh in on Allegro MicroSystems. Several institutional investors have recently made changes to their positions in the company. Bank of America Corp DE lifted its stake in Allegro MicroSystems by 136.6% in the third quarter. Bank of America Corp DE now owns 952,679 shares of the company's stock worth $27,818,000 after acquiring an additional 3,556,410 shares during the period. Invesco Ltd. lifted its position in shares of Allegro MicroSystems by 44.0% in the 4th quarter. Invesco Ltd. now owns 7,651,051 shares of the company's stock worth $201,835,000 after purchasing an additional 2,338,624 shares during the period. Alliancebernstein L.P. boosted its stake in shares of Allegro MicroSystems by 189.4% during the second quarter. Alliancebernstein L.P. now owns 2,759,872 shares of the company's stock valued at $94,360,000 after purchasing an additional 1,806,183 shares in the last quarter. Norges Bank purchased a new position in Allegro MicroSystems during the fourth quarter valued at approximately $38,457,000. Finally, Adage Capital Partners GP L.L.C. raised its stake in Allegro MicroSystems by 77.8% in the fourth quarter. Adage Capital Partners GP L.L.C. now owns 2,803,944 shares of the company's stock worth $73,968,000 after buying an additional 1,227,317 shares in the last quarter. Hedge funds and other institutional investors own 56.45% of the company's stock. About Allegro MicroSystems. Allegro MicroSystems, Inc NASDAQ: ALGM is a leading designer and manufacturer of high-performance power and sensing integrated circuits. The company focuses on semiconductor solutions that enable precise motion control, energy-efficient power management and robust sensing in a wide range of applications. Allegro's product portfolio includes Hall-effect magnetic sensors, current and position sensing ICs, motor driver and controller devices, and power management components. Allegro MicroSystems serves major automotive, industrial and consumer markets worldwide. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. Before you consider Allegro MicroSystems, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Allegro MicroSystems wasn't on the list. 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