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Investing.com -- UBS has upgraded ASM International (AS:ASMI) to a Buy rating, highlighting what it views as an attractive entry point into one of Europe’s top compounders.
The bank sees ASMI as well positioned to deliver around 20% earnings per share (EPS) compound annual growth rate (CAGR) between 2025 and 2029, despite near-term uncertainty.
The upgrade reflects confidence in long-term growth beyond the well-flagged transition to gate-all-around (GAA) transistor architecture.
“The growth opportunity from an architecture shift to GAA is well understood by the market but we believe there is less clarity beyond this,” UBS analysts led by Francois-Xavier Bouvignies said in a note.
They point to several underappreciated drivers of revenue, particularly in advanced logic and DRAM, which could create a total addressable market exceeding €5 billion by 2030.
These include new materials such as molybdenum and ruthenium, as well as new chip architectures like backside power delivery and selective ALD, the latter of which could scale to over €1.5 billion in annual revenues at the A10 node.
UBS acknowledges short-term headwinds, noting its 2026 earnings forecast is 12% below consensus. These risks stem from “a normalisation in China, as well as process/demand uncertainty at Samsung/Intel along with potential macro weakness.”
However, the bank sees these challenges as largely priced in, with ASMI trading at 29x forward price-to-earnings (P/E) for 2026 and 22x for 2027, below its five-year average of 30x for similar growth.
“We expect downward revisions to 2026 expectations in coming quarters and believe this will be a clearing event for the stock,” analysts continued. They believe that a reset in expectations—either at the Q2 earnings or during the September Capital Markets Day—could catalyze ASMI shares.
UBS trimmed its price target on the stock from €610 to €570 per share, reflecting lowered EPS estimates for 2025–2027 due to macro and currency risks. Still, the bank sees strong structural upside and sees ASMI as "one of the most attractive compounder stories in European semis."