Bank of America Asserts Allegro MicroSystem’s Inc. (ALGM) ‘Buy’ Rating, Cuts Price Target

Allegro MicroSystems Inc. (NASDAQ:ALGM) is one of the best lidar stocks to buy right now. On September 5, analysts at Bank of America reiterated a ‘Buy’ rating on the stock. However, they cut the price target to $38 from $45.

Bank of America Asserts Allegro MicroSystem’s Inc. (ALGM) ‘Buy’ Rating, Cuts Price Target

Photo by Yogesh Phuyal on Unsplash

The price target cut comes amid growing concerns that the company, like other analog and automotive semiconductor companies, faces a weaker-than-expected recovery path amid a volatile macroeconomic backdrop. The research firm also raised concerns about slowing demand in the sector, which has been worsened by rising competition.

Bank of America has already slashed its revenue forecast for the auto semiconductor sector. While it expects sales to increase by 2.2% between 2025 and 2027, it projects $50 billion in sales for next year, representing a 7% decline from the current year.

“A lumpy recovery path for analog semi vendors” is being complicated by tariff uncertainties and intensified competition in China, analysts led by Vivek Arya said in a note.

Allegro MicroSystems Inc. (NASDAQ:ALGM) develops and supplies critical semiconductor-based components and systems for lidar through its 2020 acquisition of Voxtel, a lidar system developer. Its products include eye-safe Indium Gallium Arsenide (InGaAs) photodetectors and silicon-based devices that enable long-range, high-resolution 1D, 2D, and FLASH Lidar for the automotive industry.

While we acknowledge the potential of ALGM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than ALGM and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 7 Best Cement Stocks to Buy According to Analysts and 10 Best Defensive Stocks to Buy According to Steve Cohen.

Disclosure: None. This article is originally published at Insider Monkey.