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Investing.com - BofA Securities has lowered its price target on Astera Labs (NASDAQ:ALAB) to $210 from $230 while maintaining a Neutral rating, citing potential competitive threats despite strong current performance. This adjustment aligns with InvestingPro data showing ALAB trading at a P/E ratio of 306.66 and significantly above its Fair Value, placing it among notably overvalued tech stocks.
The firm expressed concerns about Ethernet competition to Astera’s PCIe focus, particularly expected in 2027, as well as a projected deceleration in sales growth to 30-40% year-over-year from the current 100%+ rate in 2026-2027.
Astera Labs significantly exceeded third-quarter expectations with sales and earnings per share up over 100% year-over-year to $231 million and $0.49, respectively, surpassing consensus estimates by nearly 11% and 25%. This impressive performance reflects the company’s 163.8% revenue growth over the last twelve months and its "GREAT" overall financial health score of 3.26 according to InvestingPro metrics.
The company’s fourth-quarter guidance also came in well above expectations at $249 million in revenue and $0.51 in earnings per share, approximately 16% and 21% higher than consensus forecasts.
BofA raised its 2026 and 2027 earnings estimates by 11% and 4% to $2.20 and $2.94 respectively, but reduced its price objective based on a lower 69x 2027 price-to-earnings multiple compared to 79x previously, though this remains within Astera Labs’ historical 40x-115x forward PE range. With an EV/EBITDA of 614.62 and 13 analysts revising earnings upward, investors seeking deeper insights can access the comprehensive Pro Research Report for ALAB, available exclusively through InvestingPro.
In other recent news, Astera Labs Inc. announced impressive financial results for Q3 2025, with earnings per share (EPS) reaching $0.49, far exceeding the forecasted $0.13. The company also reported a significant revenue increase, reaching $230.6 million, which represents a 104% growth compared to the previous year. These results highlight Astera Labs’ strong performance in the recent quarter. Despite these positive financial figures, the company’s stock experienced a decline in aftermarket trading. Analysts had predicted a much lower EPS, indicating that the company’s performance surpassed market expectations. The recent developments underscore the company’s ability to achieve substantial revenue growth. Investors and analysts will likely continue to monitor Astera Labs for further performance updates.
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