On Friday, JPMorgan reaffirmed its Overweight rating on ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML) with a stable price target of EUR1,057.00. The firm's stance comes after ASML's guidance reduction in October 2024, which led to a bearish market sentiment towards the company. Despite this, JPMorgan's analysts believe that ASML has significantly reduced the risk for its 2025 guidance.
The analysts highlighted that only substantial new guidance cuts from major clients like Intel (NASDAQ:INTC) or Samsung (KS:005930) could prompt ASML to revise its 2025 forecasts at this early stage of the year. However, they consider that minor adjustments in guidance from these companies should not impact ASML's revenue.
The report noted that the primary concern for ASML's stock is the growth projection for 2026, for which visibility remains low. Clarity on this matter is expected to come in the summer. The analysts pointed out that ASML's backlog for 2026 shipments is currently low, indicating that significant customers such as TSMC will likely need to place orders for 2026 in the first half of 2025. These orders are anticipated to be reflected from the fourth quarter of 2024 to the second quarter of 2025, ahead of any new process or fabrication spending decisions by Intel or Samsung.
JPMorgan's analysts remain optimistic about ASML, expecting that the company should secure enough orders in the fourth quarter of 2024 to meet its 2025 guidance. They suggest that the re-rating of ASML's stock will hinge on the orders for 2026. However, the analysts also acknowledged that the quarter-to-quarter order visibility remains uncertain, and whether significant orders will materialize in the fourth quarter of 2024 cannot be predicted with certainty.
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