Astera Labs stock price target raised to $185 from $174 at Stifel

Investing.com - Stifel raised its price target on Astera Labs (NASDAQ:ALAB) to $185.00 from $174.00 on Friday, while maintaining a Buy rating on the semiconductor connectivity solutions provider. The company, currently valued at $27.2 billion, has seen its stock decline 20.7% over the past week, though it maintains an impressive 147.8% gain over the past year. According to InvestingPro analysis, the stock appears to be trading above its Fair Value.

The research firm expects Astera Labs to provide a December quarter outlook higher than its current estimate of $214.8 million, which would represent a 4.0% quarter-over-quarter increase and mark another record in quarterly revenues. The current Street consensus stands at $216.8 million. This optimistic outlook aligns with the company’s strong performance, having achieved a remarkable 163.8% revenue growth over the last twelve months.

Stifel projects that by calendar year 2025, Astera’s product mix will shift significantly, with Aries PCIe retimers accounting for approximately 72%-77% of total revenue, down from over 90% in 2024. Meanwhile, newer product lines including Scorpio Smart Switch Fabric and Taurus Ethernet smart cable modules are each expected to contribute more than 10% of revenue.

The firm also anticipates Leo CXL smart controllers will generate less than 5% of revenue in 2025, compared to less than 1% in 2024, reflecting the company’s expanding product portfolio.

Stifel expects management to reaffirm that gross margins will trend slightly lower toward the company’s long-term target of 70% over the next 12-18 months, with the firm forecasting 74.0% for the December quarter before eventually reaching 70.0% by the fourth quarter of 2026. The company currently maintains a robust gross profit margin of 75.5%, demonstrating strong operational efficiency.

In other recent news, Astera Labs reported strong financial results for the second quarter of 2025, significantly surpassing earnings forecasts. The company achieved non-GAAP diluted earnings per share of $0.44, well above the projected $0.11, and reported revenue of $191.9 million, a 150% increase compared to the previous year. In other developments, Astera Labs announced its participation in the Arm Total Design ecosystem, aiming to advance chiplet-based solutions for AI infrastructure. On the analyst front, Evercore ISI raised its price target for Astera Labs to $215, citing robust growth in the AI sector. Additionally, Stifel reiterated its Buy rating, emphasizing the company’s adept management of supply chain challenges. Meanwhile, BofA Securities initiated coverage with a Neutral rating, highlighting Astera Labs’ role in the AI connectivity market. These developments underscore the company’s strategic positioning and performance in the rapidly evolving semiconductor industry.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.