Astera Labs stock rallied today, and Morgan Stanley’s analysts think it could climb much higher.
Astera Labs (ALAB 6.60%) stock jumped in Wednesday’s trading. The company’s share price closed out the daily session up 6.6%, according to data from S&P Global Market Intelligence. The stock had been up as much as 10.4% earlier in the session.
Astera Labs stock got a significant boost thanks to bullish coverage released yesterday evening from analysts at Morgan Stanley. The analysts cited sales opportunities tied to artificial intelligence (AI) and other rising tech trends as key factors in their bull thesis.
Astera surges on ratings upgrade and price target
After the market closed yesterday, Morgan Stanley published a bullish note on Astera Labs. The financial services company raised its rating from equal weight to overweight and maintained a one-year price target of $55 per share on the stock.
Astera Labs had closed out Tuesday’s trading price at $39.11 per share, and the bullish coverage from Morgan Stanley quickly powered a pricing surge in today’s daily session. At the time of the note’s publication, Morgan Stanley’s target had an implied upside of approximately 41%. Even after today’s gains, the analyst’s target still suggests roughly 32% upside.
What’s next for Astera stock?
Astera Labs had its initial public offering in March and has seen volatile trading throughout its relatively short history as a publicly traded company. The stock rocketed higher out of the gate, but it’s now down roughly 32% from market close on the day of its public debut. Valued at roughly 18.8 times this year’s expected sales, the company also continues to have a highly growth-dependent valuation.
ALAB PS Ratio (Forward) data by YCharts. PS Ratio = price-to-sales ratio.
Some of the stock’s recent volatility stems from uncertainty about whether Astera Labs will win significant business in Nvidia‘s upcoming Blackwell G200 processors. Astera could soar if the company wins substantial contracts with Nvidia or other leading tech companies that can help power more big sales growth, but the stock remains a high-risk, high-reward play.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.