On Thursday, BofA Securities maintained its Buy rating on ASML Inc. (NASDAQ:ASML) stock, with a steady price target of $939.00. The firm's analysis pointed to several positive factors that could influence the company's performance.
Firstly, ASML's revenue guidance for China in 2025 assumes a normalization of demand despite potential additional export control restrictions.
ASML anticipates a 34% year-over-year decline in China equipment revenues, which may incorporate a comprehensive ban on ArFi equipment and servicing to entities listed in China. BofA Securities suggests this outlook could be considered conservative.
The firm also forecasts significant growth in ASML's non-China deep ultraviolet (DUV) revenues, expecting them to reach approximately €5.7 billion, which would represent a nearly 100% increase year-over-year. This projection is supported by historical DUV revenues averaging around €4.7 billion before 2021 and the expectation that higher extreme ultraviolet (EUV) revenues will drive additional DUV sales for non-critical layers.
BofA Securities estimates that ASML's EUV revenues will climb to €12 billion next year, marking a 41% increase, with low-NA contributing €11 billion and high-NA adding €1.3 billion. This growth is anticipated to be fueled by orders from major clients like TSMC and Micron (NASDAQ:MU) in the fourth quarter of 2024, which are expected to reach €2.6 billion. These orders should assist ASML in achieving the midpoint of their 2025 revenue guidance.
Lastly, the firm anticipates IBM (NYSE:IBM) revenues for ASML to hit €7.3 billion, up 17% year-over-year, aligning with the management's guidance of healthy double-digit growth. BofA Securities' analysis underscores a robust outlook for ASML, emphasizing the company's potential to outperform in the face of regulatory challenges and market demand shifts.
In other recent news, ASML Holding NV (AS:ASML) has made several notable announcements. The company has revised its 2025 revenue forecast from €30 billion to €35 billion, citing a slower recovery in traditional markets and an expected normalization of China sales. ASML reported Q3 2024 results with total net sales reaching €7.5 billion and a gross margin of 50.8%, projecting Q4 2024 net sales to be between €8.8 billion and €9.2 billion.
BofA Securities maintained a "Buy" rating on ASML, with a price target of €870.00, reflecting anticipated higher revenues from IBM. The firm also projected a 20% revenue growth in 2026 for ASML. JPMorgan, on the other hand, adjusted its price target for ASML to $1,148 from $1,207, while maintaining an Overweight rating.
Despite slower recovery in some markets, ASML sees potential growth drivers in artificial intelligence and semiconductor applications. The company also noted a decline in DUV revenue in 2024, expected to be offset by growth in the non-China segment, and anticipates EUV shipments to be pushed into 2026 due to customer delays. These are recent developments and part of the ongoing financial evolution of ASML.
InvestingPro Insights
To complement BofA Securities' optimistic outlook on ASML, 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 $271.09 billion. The company's P/E ratio of 35.87 suggests that investors are willing to pay a premium for ASML's growth prospects, aligning with BofA's positive revenue projections.
An InvestingPro Tip highlights that ASML is a prominent player in the Semiconductors & Semiconductor Equipment industry, which supports BofA's analysis of the company's potential to capitalize on growing demand for EUV and DUV technologies. Additionally, ASML's revenue for the last twelve months stands at $29.29 billion, with a healthy gross profit margin of 51.15%, indicating strong pricing power and operational efficiency.
Another InvestingPro Tip notes that ASML has maintained dividend payments for 18 consecutive years, reflecting the company's financial stability and commitment to shareholder returns. This could be particularly appealing to investors looking for both growth and income in the semiconductor sector.
For readers interested in a deeper dive into ASML's financials and market position, InvestingPro offers 14 additional tips, providing a comprehensive view of the company's strengths and potential challenges in the evolving semiconductor landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.