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On Thursday, Deutsche Bank (ETR:DBKGn) analysts made adjustments to their outlook on ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML), reducing the price target from EUR750.00 to EUR700.00. Despite this change, they maintained a Buy rating on the stock. The adjustment follows a period of challenges for ASML, as noted by the analysts. According to InvestingPro data, ASML maintains strong fundamentals with a GOOD financial health score and has consistently paid dividends for 19 consecutive years.
The analysts remarked on the recent difficulties faced by ASML, acknowledging that the company had to significantly lower its 2025 expectations in the fall of 2024. This revision was largely due to setbacks in foundry operations at Intel (NASDAQ:INTC) and Samsung (KS:005930), coupled with a slowdown in China’s market. The spring season of 2025 has continued to present obstacles, with ASML’s shares being impacted by the introduction of tariffs and potential subsequent effects not only on the broader demand for electronics but also due to potential new restrictions on Chinese semiconductor companies CXMT and YMTC. Despite these challenges, InvestingPro analysis suggests the company remains undervalued, with strong cash flows and moderate debt levels.
The recent developments regarding Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD) in China over the past 48 hours have added to the uncertainty, which has unfavorably influenced investor sentiment. The analysts highlighted that such high levels of uncertainty are unwelcome in the market.
ASML’s stock has experienced a decline of 16% year-to-date (YTD), which is set against the backdrop of the SOX index of chip stocks falling by 22%. Despite these market challenges, Deutsche Bank analysts believe that ASML is relatively well-positioned to manage the effects of geopolitical tensions. They note that ASML has a more robust foundation for its near-term expectations compared to other semiconductor capital equipment (semicap) companies. With a market capitalization of $252.76 billion and impressive profitability metrics, including a 51% gross margin, ASML demonstrates significant market strength. For detailed analysis and additional insights, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, ASML Holding NV reported first-quarter 2025 earnings, with revenue reaching €7.74 billion and a gross margin of 54.0%, slightly below market expectations. Despite the revenue miss, ASML’s earnings per share (EPS) of €6.00 exceeded forecasts, attributed to higher-than-expected gross margins. However, the company experienced a significant 44% drop in bookings, totaling €3.9 billion, with Extreme Ultraviolet (EUV) bookings falling 60% from the prior quarter. Analysts from Raymond (NSE:RYMD) James, TD Cowen, Evercore ISI, and Citi have maintained positive ratings on ASML, though some have adjusted their price targets due to the mixed results and tariff-related uncertainties.
Raymond James reduced ASML’s price target to $850, maintaining a Strong Buy rating, while TD Cowen kept its Buy rating with a target of EUR 825. Evercore ISI also maintained an Outperform rating with a EUR 965 target, despite acknowledging the lower-than-expected orders. Citi reiterated its Buy rating with a EUR 930 price target, highlighting ASML’s technological advancements and potential for long-term growth. The company’s sales in China, representing 27% of total system sales, remained stable, although there is ongoing evaluation of the impact of tariffs.
In addition, global semiconductor stocks, including ASML, have been affected by recent tariff announcements by the U.S. and China, contributing to a broader market decline. ASML’s performance is being closely watched by investors as the company navigates these challenges while maintaining its revenue and growth projections for 2025 and beyond.
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