ASML stock upgraded to Buy by UBS with €750 price target

Investing.com - UBS has maintained its Buy rating on ASML Holding NV (NASDAQ:ASML) (ASML:NA) while raising its price target to €750 from €660, citing the company’s potential return as a "quality compounder" following a year of approximately 20% stock underperformance. According to InvestingPro data, ASML, a prominent player in the Semiconductors & Semiconductor Equipment industry with a market cap of $282 billion, currently trades at a P/E ratio of 27x and has maintained dividend payments for 19 consecutive years.

The firm believes market concerns about declining lithography intensity and Chinese market uncertainty are now well understood, allowing investors to look beyond the relatively weak 2026-2027 outlook toward a projected 20% earnings per share compound annual growth rate from 2026 to 2030. This growth projection appears well-supported by ASML’s strong financial fundamentals, with InvestingPro data showing impressive revenue growth of 26.4% in the last twelve months and a healthy gross profit margin of 52.5%.

UBS expects an inflection point in 2027, driven primarily by production ramp of the A14 node at TSMC, with bottom-up analysis suggesting an increase in extreme ultraviolet (EUV) exposures from 19-22 to 20-24 for this node, while uncertainty around Intel and Samsung is expected to fade.

The firm’s analysis of High NA (numerical aperture) technology adoption indicates meaningful implementation in the next two years, forecasting 6 and 10 High NA shipments in 2027 and 2028 respectively, representing approximately 30% of group revenue growth in those years.

Several potential catalysts over the next year could support the stock, including clarity on incremental EUV exposures at industry events, commentary on High NA adoption during quarterly results, the launch of a new low NA EUV-F model with higher average selling price in the second half of 2026, and new customer announcements from Intel and Samsung. With ASML’s solid financial health score of "GOOD" on InvestingPro, which offers comprehensive analysis of 1,400+ stocks through its Pro Research Reports, investors can access detailed insights into the company’s competitive position and growth potential in the semiconductor industry.

In other recent news, ASML Holding NV reported strong second-quarter bookings of €5.5 billion but has narrowed its fiscal year 2025 sales range to the mid-point of €30-35 billion. Deutsche Bank subsequently lowered its price target for ASML to €700, citing concerns over EUV shipments. Wolfe Research maintained an Outperform rating with a price target of €800, noting that while ASML’s third-quarter guidance fell slightly short of expectations, the company upheld its full-year guidance for 2025, projecting 15% year-over-year growth. The firm also highlighted a strategic shift toward higher-priced models and increased revenue from installed base upgrades.

Meanwhile, BofA Securities adjusted its price target to €724, reducing third and fourth-quarter booking estimates due to macro and geopolitical uncertainties. Erste Group downgraded ASML from Buy to Hold, expressing concerns about revenue growth prospects for 2026. Similarly, Freedom Broker downgraded ASML to Hold, following a Q2 earnings report that exceeded expectations but came with mixed guidance for the upcoming quarter. Despite these developments, ASML management reaffirmed its fiscal year 2025 targets amidst external challenges.

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