On Thursday, Bernstein analysts, led by Sara Russo, increased their price target on ASML Inc. (NASDAQ: ASML) shares from $767.00 to $887.00 while maintaining an Outperform rating. The revision reflects expectations of solid fourth-quarter and full-year 2024 revenues, underpinned by robust EUV growth and sustained demand from China. According to InvestingPro data, ASML, currently trading at $766.71, is considered overvalued based on its Fair Value analysis, with the stock trading at a notable P/E ratio of 40.8x.
ASML’s financial performance for the fourth quarter and the full year of 2024 is anticipated to align with the guidance provided 15 months earlier. The company’s earnings per share (EPS) are projected to reach EUR 19, only marginally below the previous year by less than 5%. This outcome is consistent with ASML’s previous guidance for a ’transition year’ in 2024, considering both revenue and profit margins. InvestingPro analysis shows ASML maintains strong financial health with a 51.2% gross profit margin and operates with moderate debt levels, earning it a "GOOD" overall financial health score.
The analysts highlighted the importance of bookings and guidance for the future, particularly for 2025 and beyond. To align with Bernstein’s estimates for 2025, ASML would need to secure approximately EUR 4 billion in bookings, with close to EUR 2 billion each for EUV and non-EUV technologies. With trailing twelve-month revenue of $29.3 billion and a market capitalization of $293.5 billion, ASML remains a dominant player in the semiconductor equipment industry. For deeper insights into ASML’s financial metrics and growth potential, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks. Although current consensus expectations for fourth-quarter bookings are set at EUR 3.5 billion, forecasts are expected to increase substantially throughout 2025.
Bernstein’s analysis suggests that ASML would need to average EUR 6 billion in bookings over the next four to five quarters to meet the firm’s 2025 revenue estimates and maintain a positive trajectory into 2026. The analysts also noted signs of normalization in China system sales for 2025, as indicated by a year-over-year increase of 3% in fourth-quarter China systems revenues, despite an 18% sequential drop.
The report underscores that China’s share of system sales for the fourth quarter is projected to be 32%, a decrease from the roughly 50% seen in the previous three quarters but not yet down to the 20% total revenue guidance for 2025. Bernstein expects ASML to uphold its 2025 guidance, although they acknowledge some risks and conservatively remain slightly below their estimates.
The analysts adjusted their fourth-quarter 2024 sales estimates based on performance in China and factored in the higher-than-expected capital expenditure guidance from TSMC, leading to an upward revision of their full-year 2025 revenue forecasts. Looking ahead, the valuation focus has shifted to 2026, with Bernstein lowering the price-to-earnings (P/E) ratio from 32x 2025 EPS to 28x 2026 EPS of EUR 29.1, thereby raising their target price to EUR 850. The reduced P/E ratio accounts for the forward earnings in 2026 compared to 2025.
In other recent news, ASML Holding NV (AS:ASML) has been the subject of several financial adjustments and revised forecasts. BofA Securities has revised ASML’s price target downwards to €803 from the previous €870 while maintaining a Buy rating, reflecting a cautious stance towards the company’s future revenue and earnings projections. Meanwhile, BNP Paribas (OTC:BNPQY) Exane reinstated coverage on ASML with an Outperform rating and a price target of EUR 817.00, highlighting the company’s strong position in the semiconductor industry. Jefferies also maintained a positive stance, increasing the price target for ASML stock amid anticipated demand surge for its Extreme Ultraviolet (EUV) lithography systems.
Cantor Fitzgerald reaffirmed its Overweight rating on ASML shares, anticipating key takeaways from the upcoming Capital Markets Day and expressing confidence in ASML’s 2025 financial targets. However, Erste Group revised its rating from "Buy" to "Hold" after ASML reported a substantial decline in new orders and a downward adjustment of its 2025 revenue forecast. Despite these adjustments, Bernstein SocGen Group anticipates a recovery for ASML in 2026. These are the recent developments in ASML’s financial trajectory.
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