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Investing.com - Needham has raised its price target on Astera Labs (NASDAQ:ALAB) to $220.00 from $205.00 while maintaining a Buy rating following the company’s quarterly earnings report. The semiconductor connectivity provider, which boasts a market capitalization of $29.8 billion, has seen its shares surge 86.96% over the past year.
The semiconductor connectivity solutions provider posted what Needham described as "another significant beat and raise," with growth across its Scorpio, Aries, and Taurus product lines. InvestingPro data shows Astera Labs achieved remarkable revenue growth of 163.8% in the last twelve months, with a strong gross profit margin of 75.5%.
Astera Labs announced new Scorpio P design wins at multiple hyperscalers, supported by both merchant and custom accelerators, with Scorpio X shipments expected to begin in the fourth quarter of 2025 and ramp up in 2026.
The company’s PCIe Gen 6 products accounted for more than 20% of revenue in the third quarter of 2025, driving higher dollar content, while the PCIe version of Scorpio X-Series is now engaged with more than 10 AI platform providers.
Needham also noted that Astera’s UALink engagement remains strong, with management viewing it as additive to the company’s PCIe customer base, factors that contributed to the firm’s increased price target based on a 50x P/E multiple of its new 2028 non-GAAP EPS estimate of $4.40.
In other recent news, Astera Labs reported impressive financial results for Q3 2025, with earnings per share (EPS) of $0.49, significantly exceeding the projected $0.13. The company’s revenue also showed strong growth, reaching $230.6 million, which represents a 104% increase compared to the same period last year. Despite these positive earnings, BofA Securities has lowered its price target for Astera Labs to $210 from $230, maintaining a Neutral rating due to potential competitive threats. The firm highlighted concerns over Ethernet competition to Astera’s PCIe focus, which is anticipated to intensify by 2027. Additionally, BofA projected a slowdown in Astera Labs’ sales growth to 30-40% year-over-year from the current rate of over 100% by 2026-2027. These developments provide investors with important insights into the company’s recent performance and future challenges.
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