Astera Labs stock earns Wall Street analyst praise. Here's why.

Astera Labs (ALAB) has been receiving bullish coverage from Wall Street analysts since its initial public offering (IPO) on March 20, 2024. The semiconductor company went public at $36 per share and has been dubbed the best-performing IPO over $500 million so far this year.

Yahoo Finance's Julie Hyman and Josh Lipton break down the details.

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This post was written by Angel Smith

Video transcript

JULIE HYMAN: Let's turn now to some calls of the day. We start with astera. Labs now this is facing a fresh batch of Wall Street coverage after going public in mid-Marh. And a majority of the brokers that initiated coverage have struck a bullish stance on the stock. But the shares are down 1.5%. But let's put this in context here. This is a company that came public March 20th, a day before Reddit. We also got a lot of Reddit calls today. $36 a share, it was up 72% in that first day of trading. And it's continuing to move higher. It is the best performing IPO over $500 million.

So far, this year it is in the semiconductor connectivity business and investors like that business right now.

JOSH LIPTON: Yeah. I mean, investors have been just so hungry to find ways to play AI. And they decided this is one of them. Analysts seem to like it, Julie. I mean, we eight buys one hold, no sell. Analysts at Needham saying valuation looking pricey. But the company is among, they say the fastest growing in the semiconductor industry. They talk about industry leading margins. They expect estimates to go up from here, specifically from higher AI server shipments. Their target 85.

JULIE HYMAN: Yeah. I thought also the one equal weight or hold equivalent rating is from Joseph Moore over at Morgan Stanley, who is definitely a veteran experienced chip analyst. He says it's the highest growth company within his coverage. But it's got a high valuation to match that high growth. He said though that the stock will be a, quote, "core small cap holding."

JOSH LIPTON: There you go.

JULIE HYMAN: Yeah.