Chipmaker Allegro MicroSystems early Tuesday topped Wall Street's targets for its fiscal first quarter. It also offered an outlook above analyst estimates for the current quarter. But ALGM stock plunged after the report.
The Manchester, N.H.-based company earned an adjusted 39 cents a share on sales of $278.3 million during the quarter that ended June 30. Analysts polled by FactSet had expected earnings of 37 cents a share on sales of $275.9 million. On a year-over-year basis, Allegro earnings increased 63% while sales climbed 28%.
For the current quarter, Allegro predicted adjusted earnings of 37 cents a share on sales of $275 million. That's based on the midpoint of its outlook. Wall Street had called for earnings of 36 cents a share on sales of $270.2 million in the fiscal second quarter ending Sept. 29.
Allegro makes power and sensing semiconductors for automotive, industrial and other markets.
ALGM Stock Drops After Report
Allegro's outlook implied caution in the China market as well as weakness in the data center and consumer markets, Mizuho Securities analyst Vijay Rakesh said in a note to clients. He kept his buy rating on ALGM stock with a price target of 56.
However, on the stock market today, ALGM stock sank 12.3% to close at 45.24.
On July 13, ALGM stock broke out of a cup base at a buy point of 48.72, according to IBD MarketSmith charts. It hit a record high of 53.05 on July 19. ALGM stock now is in the 7% to 8% sell zone of its recent breakout.
"We continue to sharpen our market focus on e-mobility, and select industrial markets, including clean energy and automation, with sales in these strategic areas growing 63% year over year to $159 million, or 57% of total first-quarter sales," Chief Executive Vineet Nargolwala said in a news release.
He added, "The results further underscore our strategy focused on the mega trends of electrification and automation, which are expected to transform automotive and industrial markets through the next decade."
More Chip Stocks Posting Results
Other semiconductor stocks moving on earnings reports on Tuesday included Lattice Semiconductor, Monolithic Power Systems and Rambus. Those three chipmakers posted June-quarter results late Monday.
Like ALGM stock, Lattice, Monolithic and Rambus are on the IBD Tech Leaders list.
Lattice and Monolithic both edged above targets for sales and earnings in the June quarter and with their revenue outlooks for the September quarter. Meanwhile, Rambus delivered mixed second-quarter results and disappointed with its guidance for the current quarter.
On Tuesday, Lattice rose 2.2% while Monolithic retreated 1.6% and Rambus tumbled 12.4%.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.