BofA Securities resumed coverage on Allegro MicroSystems (NASDAQ:ALGM) with a Buy rating and a $38 price target, suggesting a potential upside of 33% as the company positions itself at the intersection of key growth sectors.

Allegro is a dominant player in magnetic sensors, essential components for electric vehicles and advanced driver-assistance systems (ADAS). While current automotive demand may be soft, BofA expects a cyclical rebound to boost performance in the near to mid-term.

Beyond autos, Allegro is expanding into high-growth areas like power management solutions for data centers and clean energy applications—two markets that offer strong long-term tailwinds. BofA forecasts Allegro to deliver a compound annual sales growth of 13% and a 46% CAGR in pro forma EPS from calendar year 2024 to 2027, significantly outpacing industry peers.

With a compelling mix of sector leadership, emerging revenue streams, and robust earnings potential, Allegro is seen as a standout opportunity in the semiconductor space.