Astera Labs (ALAB 0.63%) stock is sinking this week following new analyst coverage. The semiconductor specialist’s share price had fallen as low as 15.8% for the week during Thursday’s trading before recovering to a 7.1% dip on the week, according to data from S&P Global Market Intelligence.
Morgan Stanley published new coverage on Astera Labs before the market opened Thursday, downgrading its rating on the stock from overweight to equal weight. The company maintained its one-year price target on the stock at $142 per share.
Astera Labs stock falls on Morgan Stanley coverage
On the heels of big gains for Astera Labs stock, Morgan Stanley no longer sees sufficient upside potential to classify the stock as a buy. At the time of the note’s publication, the firm’s one-year price target of $142 per share implied additional upside of 6.6%. Now that the stock has fallen in conjunction with the new coverage, Morgan Stanley’s one-year price target suggests potential upside of roughly 14.8%.
The firm’s analysts think that Astera will continue serving up very strong sales growth, but they view the stock as richly valued. While they expect that the business will continue to benefit from ramping sales on new products, they believe these positive catalysts have already largely been priced into the stock.
What’s next for Astera Labs?
Astera Labs stock is still up roughly 134% over the past six months. The company has a market capitalization of approximately $18.5 billion, and it’s valued at 30 times expected sales and 100 times expected earnings.
ALAB Market Cap data by YCharts
Astera Labs has seen its sales and valuation soar in conjunction with demand and excitement surrounding the adoption of artificial intelligence (AI) technologies. The company makes components that are included in some of Nvidia‘s processors, and it’s seen some strong sales performance in conjunction with strong performance for the AI leader and other players in the semiconductor industry.
With its last quarterly report, Astera Labs announced that its revenue had increased 206% year over year to hit $113.1 million. The company also managed to post a gross margin of 77.7% in the period, which suggests the potential for very strong earnings growth down the line if sales continue to increase at a brisk pace. The company is scheduled to report its fourth-quarter results and host a conference call after the market closes on Feb. 10, giving investors a close a look at recent business performance and how trends are shaping up for the company.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
