Thursday, Cantor Fitzgerald adjusted the stock price target for ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML), a leading supplier of semiconductor manufacturing equipment, to EUR750.00 from EUR1,000.00, while maintaining an Overweight rating on the stock.
The firm cited the company's recent quarter as a "disaster" due to order weakness and a reduction in the company’s CY25 outlook, which has led to the stock trading down over 20% since the release of an errant press release.
The analyst from Cantor Fitzgerald noted that ASML's stock might have found its near-term bottom at around EUR600, which is 25 times the new mid-point of the 2025 target model. With the current share price at EUR633, the firm believes that the sell-off is mostly complete. However, they anticipate that it will take some time for positive catalysts to emerge and for investor confidence to be regained.
Looking ahead, the firm highlighted the upcoming Capital Markets Day on November 14, 2024, as a potential point of interest for investors. The event is expected to provide insights into technology trends, commentary on the 2026 outlook, an updated 2030 model, and the company's future roadmap, including High NA and Hyper-NA technologies.
Despite these positive developments, the firm suggests that ASML may remain in the "penalty box" until there is renewed growth confidence into CY26, leading to a likely share price range between EUR600-700 in the interim.
Furthermore, Cantor Fitzgerald has decided to remove ASML from its Top Picks list due to the recent challenges and the time it may take for the company to recover. Nonetheless, the firm finds it difficult to downgrade the stock from Overweight, as they see a path of catalysts over the next 6-12 months that could support an upside to around EUR750. This target reflects 25 times the firm's updated CY26 EPS estimate of EUR30.
Lastly, the analyst pointed out that ASML's CY25 estimates have now been de-risked considering the upcoming domestic China restrictions, which is not the case for other semiconductor equipment peers. This factor could lead to relative outperformance for ASML shares, especially with potential Department of Commerce/Bureau of Industry and Security regulations expected to be announced by the end of the year.
In other recent news, ASML Holding N.V. has revised its 2025 revenue forecast, citing a slower recovery in traditional markets and the normalization of China sales. The company's Q3 2024 results revealed total net sales of €7.5 billion and a gross margin of 50.8%. Projections for Q4 2024 net sales are estimated to be between €8.8 billion and €9.2 billion.
BofA Securities has maintained a "Buy" rating on ASML, expressing a bullish stance on the company's growth trajectory. The firm's analysis suggests that potential risks in China might be overestimated and anticipates significant growth in ASML's non-China deep ultraviolet revenues. BofA also expects ASML's extreme ultraviolet revenues to increase by 41% next year.
Conversely, JPMorgan adjusted its price target for ASML to $1,148, while maintaining an Overweight rating. The revision follows ASML's updated guidance for 2025, and the firm predicts that if ASML can achieve sales close to €40 billion in 2026, the company could reach or slightly exceed earnings per share of €33.
These are recent developments in ASML's financial trajectory, with multiple analysts expressing confidence in the company's ability to navigate market changes and regulatory challenges.
InvestingPro Insights
ASML's recent market performance aligns with the analyst's observations, as reflected in InvestingPro data. The stock has experienced a significant decline, with a 26.55% drop in the three-month price total return. This corroborates Cantor Fitzgerald's assessment of the stock's recent struggles following the company's disappointing quarter.
Despite these challenges, ASML maintains a strong financial position. The company's revenue for the last twelve months stands at $29,295.56 million, with a healthy gross profit margin of 51.15%. This robust financial foundation supports the analyst's view that ASML could recover in the medium term.
InvestingPro Tips highlight ASML's strengths, noting that it's a "Prominent player in the Semiconductors & Semiconductor Equipment industry" and has "maintained dividend payments for 18 consecutive years." These factors underscore the company's resilience and market position, which could contribute to its recovery as suggested by Cantor Fitzgerald.
The current P/E ratio of 35.87 indicates that ASML is trading at a high earnings multiple, which aligns with the analyst's observation about the stock's valuation. This metric, combined with the InvestingPro Tip that ASML is "Trading at a high EBIT valuation multiple," suggests that investors are still pricing in future growth potential despite recent setbacks.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for ASML, providing deeper insights into the company's financial health and market position.
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