Barclays cites Lumentum’s expanding margins and valuation pullback while downgrading Allegro and Penguin on sector risks and margin pressures.
Barclays upgraded Lumentum (LITE) to Overweight from Equal Weight, highlighting expanding gross margins, improved factory utilization, and a recent share price decline that improved valuation. The firm also noted idiosyncratic pricing benefits and stronger operational performance relative to peers as key drivers for the upgrade.
Allegro MicroSystems (ALGM) was downgraded to Equal Weight due to its heavy automotive sector exposure and concerns that consensus estimates are overly optimistic. Barclays also downgraded Penguin Solutions, citing gross margin pressure from its Memory business and skepticism about the impact of Advanced Computing and CXL trends, which it views as overvalued compared to peers.