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Astera Labs Tops Targets, But Stock Drops On Margin Concerns
  
Astera Labs ( ALAB) late Tuesday handily beat analyst estimates for the third quarter and guided higher than views for the current period. But ALAB stock fell in extended trading on profit margin concerns.
The San Jose, Calif.-based company earned an adjusted 49 cents a share on sales of $230.6 million in the September quarter. Analysts polled by FactSet had expected earnings of 39 cents a share on sales of $206.5 million. On a year-over-year basis, Astera Labs earnings increased 113% while sales climbed 104%.
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Astera Labs makes high-bandwidth, low-latency semiconductor-based connectivity systems for cloud computing and AI data centers.
For the current quarter, Astera Labs expects to earn an adjusted 51 cents a share on sales of $249 million. That's based on the midpoint of its guidance. Wall Street was looking for earnings of 42 cents a share on sales of $216.8 million in the December quarter. In the fourth quarter last year, it earned an adjusted 37 cents a share on sales of $141.1 million.
However, on a conference call with analysts, Chief Financial Officer Mike Tate reportedly mentioned that gross margins will contract from their current level of 75%.
In after-hours trading on the stock market today, Astera Labs stock initially rose but then retreated during the conference call. In recent trades, ALAB stock fell more than 4% to 172.01. During the regular session Tuesday, ALAB stock dropped 6.4% to close at 179.31.
ALAB stock is on the IBD Tech Leaders list.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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