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On Thursday, BofA Securities upheld its Buy rating on ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML), with a steadfast price target of EUR859.00. This aligns with the broader market sentiment, as InvestingPro data shows 9 analysts have recently revised their earnings expectations upward for the upcoming period. The decision came following a detailed analysis of the company’s revenue guidance for the year 2025. BofA Securities analyst Didier Scemama conducted a review that led to a slight increase in the expected shipments of Extreme Ultraviolet (EUV) lithography systems, adjusting the forecast from 43 to 45 units. Conversely, there has been a reduction in the Deep Ultraviolet (DUV) revenue projections.
Scemama’s analysis suggests that ASML’s midpoint revenue guidance for the calendar year 2025, which stands at EUR32.5 billion, is within reach. This target represents significant growth from the company’s current trailing twelve-month revenue of $29.3 billion, with a robust gross margin of 51.28%. To achieve this target, ASML would require EUR6.4 billion in DUV bookings, a figure that coincidentally aligns with the estimated revenue ASML is expected to generate from China. Moreover, the analyst anticipates that revenues from IBM (NYSE:IBM) will need to exceed the company’s guidance, reaching EUR8 billion rather than the projected EUR7.5 billion. This indicates that either the forecasts for EUV are too conservative or that the management’s guidance is overly cautious by EUR500 million.
The analyst emphasized ASML’s appealing valuation, noting that the current price represents 20 times the forecasted FY25 Enterprise Value/Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA). The current EV/EBITDA stands at 25.02x, with a P/E ratio of 33.39x. According to InvestingPro Fair Value analysis, ASML currently appears slightly undervalued. This valuation is notably lower than the company’s five-year historical average multiple of 26.3 times. The reiteration of the Buy rating and the price objective reflects confidence in ASML’s financial prospects and its position in the market.
ASML, a key player in the semiconductor industry, is renowned for its advanced lithography systems, which are critical for the production of cutting-edge microchips. With an overall financial health score of "GOOD" from InvestingPro, and its next earnings report due on April 16, 2025, the company maintains a strong market position. The company’s EUV and DUV systems are essential for semiconductor manufacturers as they continue to innovate and meet the growing demand for more powerful and efficient electronic devices. Discover 12 additional exclusive insights about ASML with an InvestingPro subscription, including detailed valuation metrics and growth projections. The analyst’s projections and the maintained Buy rating underscore the belief in ASML’s ability to meet its financial targets and continue to thrive in the dynamic semiconductor market.
In other recent news, ASML has reported a decrease in customer demand for 2024 due to uncertainties surrounding export controls, as detailed in the company’s annual report. The report highlights that U.S. restrictions on exports to China have significantly impacted ASML, with 36% of its sales previously coming from Chinese entities now under these restrictions. Despite these challenges, ASML’s fourth-quarter order intake surpassed market expectations, with an impressive EUR7 billion in orders, driven by strong investments from leading foundries and memory companies. Analysts from Berenberg and JPMorgan have maintained positive ratings on ASML, citing robust order activity and potential future investments from major customers like Intel (NASDAQ:INTC) and Samsung (KS:005930).
Lam Research (NASDAQ:LRCX) has introduced two new tools aimed at boosting the production of advanced AI chips, capitalizing on the growing demand for semiconductors. The ALTUS Halo and Akara tools are designed to enhance chip performance and functionality, positioning Lam Research competitively against other major suppliers in the semiconductor equipment market. Previously, Lam Research projected third-quarter revenue that exceeded market expectations, indicating strong demand from chip manufacturers. Raymond (NSE:RYMD) James has reaffirmed a Strong Buy rating on ASML, following the company’s better-than-expected fourth-quarter results and optimistic outlook for 2025.
ASML’s strategic position in the semiconductor industry remains strong, with a diversified customer base and a solid order backlog. The company’s EUV technology continues to be a critical component for next-generation semiconductor production. As the semiconductor industry evolves, ASML’s ability to secure and fulfill sizable orders from key clients will be closely monitored by investors and analysts alike.
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