ALGM
Allegro MicroSystems, Inc.
$50.72
Platform & Compounding FCF
70%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 160.6% above fair value
You pay
$50.72
Bear
$15.01
Fair
$19.46
Bull
$23.66
Bear
$15.01
-70.4%
5% stage 1 growth, 12% discount
Fair
$19.46
-61.6%
9% stage 1 growth, 12% discount
Bull
$23.66
-53.4%
11% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
33%
Implied Market Multiple
76.6x
Market is pricing in (growth)
29.1%
vs 8.5% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $54.43 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $19.46 per share.
Warnings
Wall Street's average price target is $54.43 (from 13 analysts). Our estimate is 80% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions