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Investing.com -- Rothschild & Co Redburn upgraded ASML Holding NV (AS:ASML) to “buy” from “neutral” and raised its price target to €1,200 from €900, citing improving commercial prospects for its high numerical aperture (HNA) extreme ultraviolet (EUV) lithography technology and stronger long-term earnings visibility, in a note dated Friday.
The brokerage’s said advances in HNA field stitching, alongside rising chiplet adoption for AI data center processors, have significantly improved the technology’s viability.
Rothschild & Co Redburn’s analysts said the improvements coincide with expectations that Taiwan Semiconductor Manufacturing Co. (TSMC) will formalize its HNA roadmap at its Technology Symposium in April 2026.
Redburn’s revised analysis projects lithography intensity will climb to 23% of wafer fabrication equipment capital expenditure by 2030, supported by the adoption of gate-all-around (GAA) transistors.
The brokerage said this marks a return to “Dennard-like scaling,” where transistor performance, cost, and power efficiency improve simultaneously.
Earnings forecasts for 2026-30 were raised by 7-17%, leaving the brokerage’s estimates 7-12% above consensus.
The brokerage cited a broadening customer base across leading-edge foundries, including Intel and Samsung, and a stronger outlook for EUV demand.
ASML’s HNA EUV tool development was highlighted as a key driver of the upgrade. The company’s collaboration with Intel and Belgium’s IMEC has led to improvements in overlay accuracy and throughput.
ASML’s “extra measures” process reduced the throughput penalty from field stitching to 19%, with a roadmap to lower it further to 10%, the brokerage said.
The note also cited comments from ASML chief executive Christophe Fouquet during the company’s October 2025 earnings call, where he said over 300,000 wafers had been processed on the high NA system, placing it “well ahead” of the low NA EUV platform at a similar stage of introduction.
Rothschild & Co Redburn’s updated model assumes total revenue will rise from €32.6 billion in 2025 to €55.9 billion in 2030, with operating margins improving from 35% to 44% over the same period.
The brokerage values ASML at 25 times two-year forward EV/EBIT, reflecting its position in the HNA adoption cycle, and sees potential upside to 30-33 times if customers accelerate deployment.
The analysts forecast HNA EUV revenue to increase from €2.3 billion in 2026 to €6 billion in 2030, accounting for up to 55% of the uplift in their long-term earnings estimates.
Risks to the new rating include possible delays in HNA rollout and weaker semiconductor capital spending if reshoring efforts result in overcapacity, the note said.