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Investing.com - Northland downgraded Astera Labs (NASDAQ:ALAB) from Outperform to Market Perform on Tuesday, maintaining a price target of $120.00. The stock, currently trading at $121.89, has shown remarkable momentum with a 31.97% gain in the past week, though InvestingPro data indicates it may be trading above its Fair Value.
The research firm cited valuation concerns as the primary reason for the downgrade, noting that even with a projected 50% compound annual growth rate through 2028, the stock is already trading at approximately 30 times estimated non-GAAP earnings for that year. This aligns with current metrics showing a P/E ratio of 463.72 and impressive but potentially stretched gross margins of 75.76%.
Northland estimates that Astera Labs could achieve non-GAAP earnings of roughly $4 per share by calendar year 2028, which would exceed the current consensus estimate of $3 per share.
While acknowledging that Astera Labs is well-positioned for strong performance in calendar year 2025 and that earnings estimates will likely increase, Northland expressed caution about pushing valuations higher.
The firm specifically mentioned tariffs and macroeconomic uncertainty as additional factors influencing its decision to downgrade the stock despite maintaining its $120 price target.
In other recent news, Astera Labs has seen several notable developments. Stifel has increased its price target for Astera Labs to $110, anticipating that the company could exceed its $172.5 million revenue estimate for the June quarter, driven by the growth of its Aries retimers and new Smart Gearbox. Craig-Hallum also raised its price target to $120, citing the impact of the Scorpio switch family on the company’s market position and growth potential. Additionally, Evercore ISI lifted its target to $104, maintaining an Outperform rating, and noted that Astera Labs’ UALink technology could lead to stronger than expected financial performance.
William Blair initiated coverage with an Outperform rating, highlighting Astera Labs’ leadership in connectivity silicon for AI servers and racks. The company’s products are designed to improve data center communication speeds, making them crucial for hyperscale computing providers. Furthermore, Astera Labs announced a collaboration with NVIDIA (NASDAQ:NVDA) to enhance the NVLink Fusion ecosystem, aiming to support hyperscalers with advanced AI network solutions. These recent updates underscore Astera Labs’ strategic advancements and its potential for sustained growth in the semiconductor industry.
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