Stifel maintained a Hold rating on ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML), with a steady price target of EUR 850.00. The firm's analysis highlighted a significant drop in Q3 orders, which sharply declined to €2.6 billion from €5.6 billion in Q2. This decrease was particularly notable in orders for EUV systems, which fell to €1.4 billion from €2.5 billion in the previous quarter. Logic orders also saw a reduction, amounting to €1.2 billion in Q3 compared to €4.1 billion in Q2, while memory orders slightly decreased to €1.4 billion from €1.5 billion.
Despite the decrease in orders, ASML provided solid Q4 guidance, projecting sales in the range of €8.8 billion to €9.2 billion, aligning with the consensus estimate of €9.0 billion. The company anticipates a gross margin between 49% and 50% for Q4, which is slightly below the consensus expectation of 51.4%. This points to a potential minor shortfall in EBIT levels when including operating expenses.
In the third quarter, ASML reported a substantial fall in EUV orders, down from €2.5 billion in Q2 to €1.4 billion. The revenue from EUV systems during the same period was €2.1 billion, which constituted 35% of the total system sales of €5.9 billion. This figure was below the forecasted consensus for EUV sales of €2.7 billion. The upcoming conference call, scheduled for 15:00 CEST tomorrow, is expected to center around the weak EUV order intake and its potential impact on the company's growth prospects for 2025.
ASML Holding NV has been the subject of various analyst revisions due to recent developments. Citi maintained a Buy rating on ASML, despite the company's reported shortfall in third-quarter orders and a reduction in its 2025 guidance. Citi's endorsement is based on factors such as accelerated digital transformation and the maturation of Extreme Ultraviolet (EUV) technology.
Raymond James reduced its price target for ASML but maintained a Strong Buy rating. The firm's revised outlook is based on an evaluation of ASML's near-term quarterly bookings and its 2025 financial targets. Morgan Stanley also adjusted its stance on ASML, shifting the rating from Overweight to Equalweight and reducing the price target. The firm cited a possible spending slowdown which could impact earnings growth for ASML in the years 2025 and 2026.
Meanwhile, Deutsche Bank adjusted its price target for ASML, citing a predicted 22% decline in China sales by 2025 due to challenges in the semiconductor market. Despite this, Deutsche Bank maintained its Buy rating. BofA Securities revised its price target on ASML shares, reducing it due to lowered earnings projections for 2025 and 2026, but also maintained a Buy rating.
Finally, UBS downgraded ASML's stock from Buy to Neutral, and Barclays upgraded it from Equal Weight to Overweight.
InvestingPro Insights
ASML Holding NV's recent financial data and market performance offer additional context to the Stifel analysis. Despite the reported drop in Q3 orders, ASML maintains a strong market position with a market capitalization of $286.33 billion. The company's P/E ratio of 40.29 suggests investors are still willing to pay a premium for its shares, reflecting confidence in its long-term prospects.
InvestingPro Tips highlight ASML as a "Prominent player in the Semiconductors & Semiconductor Equipment industry," which aligns with the company's significant role in EUV systems production. Additionally, ASML "has maintained dividend payments for 18 consecutive years," indicating financial stability even in the face of cyclical industry challenges.
The company's revenue for the last twelve months stands at $27.26 billion, with a gross profit margin of 51.44%. This robust margin is consistent with ASML's Q4 guidance of a 49-50% gross margin, although slightly below analyst expectations.
For investors seeking a deeper understanding of ASML's financial health and market position, InvestingPro offers 12 additional tips, providing a comprehensive view of the company's strengths and potential risks in the current semiconductor market landscape.
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