On Thursday, BofA Securities maintained a positive stance on ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML), reiterating a "Buy" rating and a price target of €870.00 ($939.00). The firm has slightly increased its estimated earnings per share (EPS) for calendar years 2025 and 2026 by 3%, reflecting anticipated higher revenues from IBM (NYSE:IBM).
The price objective is based on a 23 times multiple of the expected enterprise value to EBITDA for the year 2026, a slight reduction from the previous 24 times multiple, adjusting for lower sector multiples. This valuation falls within ASML's historical range of 17.5 to 35 times.
The analyst highlighted several positive factors for ASML, including the company's expectation of normalized demand in China by 2025 despite potential additional export control restrictions. ASML's guidance suggests a 34% year-over-year decline in China equipment revenues, which may be conservative if a full equipment and servicing ban does not materialize.
ASML's non-China deep ultraviolet (DUV) revenues are projected to reach approximately €5.7 billion, nearly doubling year-over-year. This forecast is supported by past average DUV revenues of about €4.7 billion before 2021 and the anticipated pull-through of extreme ultraviolet (EUV) technology sales for non-critical layers.
For 2026, BofA Securities anticipates several variables that could influence ASML's performance, including the delivery of EUV tools delayed by Intel (NASDAQ:INTC) and Samsung (KS:005930), the success of high numerical aperture EUV systems, the recovery of the Chinese market, and a robust capital expenditure cycle in artificial intelligence and DRAM.
A 20% revenue growth in 2026 is projected, which would place ASML at attractive price-to-earnings and EV/EBITDA multiples.
Looking further ahead, the analyst believes that ASML's 2030 revenue and EPS targets are achievable, implying a compound annual growth rate (CAGR) of approximately 10% from 2025 onwards.
In other recent news, ASML Inc. has experienced a series of developments. JPMorgan has adjusted its price target for the company, reducing it to $1,148 from $1,207, while maintaining an Overweight rating. This follows ASML's revised guidance for 2025 and the anticipation of discussions shifting towards the company's prospects for 2026.
If ASML can achieve sales close to €40 billion in 2026, the company could potentially reach or slightly exceed earnings per share (EPS) of €33, according to JPMorgan.
ASML has also revised its 2025 revenue forecast to EUR 30 billion to EUR 35 billion, attributing this adjustment to a slower recovery in traditional markets and an expected normalization of China sales. The company reported Q3 2024 results with total net sales reaching EUR 7.5 billion and a gross margin of 50.8%. Furthermore, ASML projected Q4 2024 net sales to be between EUR 8.8 billion and EUR 9.2 billion.
In addition to these financial updates, ASML anticipates a decline in DUV revenue in 2024, which is expected to be offset by growth in the non-China segment. The company also expects EUV shipments to be pushed into 2026 due to customer delays. However, ASML projects healthy growth for its installed base management in 2025. Despite the revisions, ASML sees potential growth drivers in AI and semiconductor applications.
InvestingPro Insights
To complement BofA Securities' positive outlook on ASML Holding NV, recent data from InvestingPro provides additional context for investors. Despite the recent market volatility, ASML maintains a strong financial position with a market capitalization of $269.23 billion. The company's P/E ratio of 35.88 reflects the market's high expectations, aligning with BofA's optimistic projections for future growth.
InvestingPro Tips highlight ASML's status as a prominent player in the Semiconductors & Semiconductor Equipment industry, supporting BofA's analysis of the company's market position. The company's ability to maintain dividend payments for 18 consecutive years demonstrates financial stability, which is crucial as it navigates potential market challenges mentioned in the article, such as export control restrictions in China.
While the stock has experienced a significant price drop over the last three months, with a -26.55% total return, this aligns with the article's discussion of potential near-term headwinds. However, ASML's strong long-term performance is evident in its high return over the last decade, as noted in another InvestingPro Tip.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for ASML, providing a deeper understanding of the company's financial health and market position.
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