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On Thursday, Wells Fargo (NYSE:WFC) analysts adjusted their outlook on ASML Inc. (NASDAQ:ASML) shares, lowering the price target to $840 from the previous $860. Despite this decrease, the firm maintained its Overweight rating on the stock. The revision comes in light of discussions about the potential impact of U.S. tariffs on ASML’s business operations. With analyst targets ranging from $751 to $1,105 and the stock currently trading at $635, InvestingPro analysis suggests ASML is trading below its Fair Value, presenting a potential opportunity for value investors.
The analysts pointed out several direct tariff implications that ASML could face, including tariffs on whole system shipments to the U.S., tariffs on parts and tools used for field operations within the country, and imports for manufacturing in ASML’s Connecticut and California facilities. Additionally, retaliatory tariffs by other countries on U.S. exports were mentioned as a concern. Despite these challenges, ASML maintains strong financial health with a moderate debt level and an impressive Altman Z-Score of 8, indicating robust financial stability.
In the midst of these uncertainties, ASML reiterated its revenue guidance for 2025, aiming for €30-€35 billion. The company’s backlog for Extreme Ultraviolet (EUV) lithography systems is expected to cover the midpoint of this guidance, with Deep Ultraviolet (DUV) lithography systems coverage at 90%. Wells Fargo analysts are looking at potential upside drivers, such as demand related to artificial intelligence and the readiness of semiconductor fabrication plants to take advantage of pre-built EUV tools for revenue growth. With a robust gross profit margin of 51% and strong cash flows, InvestingPro data reveals ASML has maintained dividend payments for 19 consecutive years, demonstrating consistent shareholder returns.
Furthermore, ASML anticipates an uptick in demand from China, projecting that total revenue from the region will account for just over 25% of the company’s total revenue, a slight increase from previous estimates. This is expected to be driven by demand for DUV and immersion technology systems, despite an overall year-over-year decline projected for 2025. The company’s current revenue of $29.3 billion and 15% projected growth for 2025 underscore its market leadership position.
Lastly, ASML’s bookings for the first quarter of 2025 were reported at approximately €3.9 billion, falling short of both the previous quarter’s €7.1 billion and the buy-side expectation of €4 billion to €5 billion. EUV bookings were particularly lower than anticipated, at €1.2 billion compared to the €4.1 billion in the fourth quarter of 2024 and the buy-side’s expectation of around €2 billion. Non-EUV bookings were also down from the previous quarter but showed a slight year-over-year increase. For deeper insights into ASML’s financial health and growth prospects, including exclusive ProTips and comprehensive valuation metrics, visit InvestingPro to access the detailed Pro Research Report.
In other recent news, ASML Holding NV (AS:ASML) has experienced a series of significant developments affecting its outlook and investor sentiment. The company reported first-quarter 2025 revenue of €7.7 billion, slightly below market expectations, and an EPS of €6.00, surpassing forecasts due to higher gross margins. Despite a 44% decline in bookings to €3.9 billion, ASML maintained its revenue projections for 2025 and expects growth in 2026. Raymond (NSE:RYMD) James adjusted its price target for ASML to $850, citing strong gross margin performance but higher operating expenses affecting EPS forecasts. Deutsche Bank (ETR:DBKGn) also revised its price target to EUR700, maintaining a Buy rating despite acknowledging challenges such as setbacks in Intel (NASDAQ:INTC) and Samsung (KS:005930)’s foundry operations and tariff-related uncertainties. TD Cowen and Citi analysts reiterated their Buy ratings, with price targets of EUR825 and EUR930 respectively, highlighting ASML’s resilience amid economic uncertainties and its potential for future growth. Evercore ISI maintained an Outperform rating, despite ASML’s orders and projections falling short of expectations, noting a significant P/E compression over the past nine months. These developments come as ASML navigates geopolitical tensions and tariff impacts, with analysts expressing mixed but generally positive long-term outlooks.
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