Bank of America analysts raised their price target for ASM International NV (AS:ASMI) to €860 per share from €758 in a note Thursday, maintaining a Buy rating on the stock.
BofA described the company as a "critical AI enabler," stating that their deep dive suggests its CY25/CY27E revenue guide might be too low.
The bank expects ASMI to outgrow the WFE market by around 8 percentage points per year over the next four years thanks to its leading position in ALD and Epi tools.
"Specifically, we believe that the combination of (A) higher WFE estimates, (B) larger TAM estimates for ASM's core segments (ALD and Epi) and (C) market share gains could result in CY27E revenues of €5.1bn/EBIT margins of 33% vs company guide of €4.0-5.0bn/EBIT margins of 26-31%," said BofA.
"Our base case implies CY23-27E EPS CAGR of 27% with CY27E EPS of €31 (19% above consensus), while our bull case scenario implies €33," they add.
The bank also highlighted the company's long growth duration, deep moat, unique positioning in its coverage and strong free cash flow (FCF) generation as reasons for its bullishness on the stock.
They estimate ASMI will generate €3.5 billion of FCF through 2027E, allowing the company to return more cash to shareholders.