Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 30 Jan, 25 | ASML | Buy | USD 712.65 | USD 776.79 | USD 833.8 | 18 days | 17.0% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
ASML Holding N.V. develops, produces, markets, sells, and services advanced semiconductor equipment systems for chipmakers. It offers advanced semiconductor equipment systems, including lithography, metrology, and inspection systems. The company also provides extreme ultraviolet lithography systems; and deep ultraviolet lithography systems comprising immersion and dry lithography solutions to manufacture various range of semiconductor nodes and technologies. In addition, it offers metrology and inspection systems, including YieldStar optical metrology systems to assess the quality of patterns on the wafers; and HMI electron beam solutions to locate and analyze individual chip defects. Further, the company provides computational lithography solutions, and lithography systems and control software solutions; and refurbishes and upgrades lithography systems, as well as offers customer support and related services. It operates in Japan, South Korea, Singapore, Taiwan, China, rest of Asia, the Netherlands, rest of Europe, the Middle East, Africa, and the United States. The company was formerly known as ASM Lithography Holding N.V. and changed its name to ASML Holding N.V. in 2001. ASML Holding N.V. was founded in 1984 and is headquartered in Veldhoven, the Netherlands.
Revenue Growth: Net sales reached €7.5 billion in Q3 2024, exceeding expectations and contributing to a gross profit of €3.79 billion, up from €3.21 billion in Q2 2024.
Higher Lithography System Sales: ASML sold 106 new lithography systems in Q3 2024, a 19% increase from 89 units in Q2 2024, indicating strong demand for its products.
Lower 2025 Sales Forecast: ASML revised its 2025 net sales projection to €30-35 billion, a decrease from previous expectations, mainly due to delayed EUV demand and cautious customer sentiment.
Decline in Net Bookings: Net bookings for Q3 2024 totaled €2.6 billion, significantly lower than previous quarters, suggesting potential future revenue slowdowns.
Key investment risks for ASML include delayed EUV system demand impacting revenue growth, fluctuations in semiconductor industry cycles affecting customer orders, geopolitical tensions disrupting supply chains and market access, and high R&D costs required to maintain technological leadership.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 712.65 | 620.01 | 776.79 | 833.8 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Q3 2024 Financial Results
ASML reported net sales of €7.5 billion for Q3 2024, surpassing initial projections. This growth was fueled primarily by strong demand for Deep Ultraviolet (DUV) lithography systems and Installed Base Management services. The company recorded a gross margin of 50.8%, aligning with expectations. Net income reached €2.1 billion, with earnings per share (EPS) of €5.28, reflecting solid profitability. Net bookings amounted to €2.6 billion, including €1.4 billion from Extreme Ultraviolet (EUV) system sales.
Q3 FY24 Performance Overview
ASML sold 106 new lithography systems, up from 89 units in Q2 2024, along with 10 used systems, a slight dip from 11 units in the previous quarter. Revenue from Installed Base Management increased to €1.54 billion, compared to €1.48 billion in Q2. Gross profit rose to €3.79 billion, up from €3.21 billion in Q2, indicating stable margins despite ongoing market challenges.
2025 Outlook
For 2025, ASML projects net sales between €30 billion and €35 billion, with a gross margin ranging from 51% to 53%. However, this outlook is lower than prior forecasts due to delays in EUV system demand. The company expects a gradual market recovery throughout 2025, though customer sentiment remains cautious given current economic conditions.
Full-Year 2024 Guidance
ASML has adjusted its 2024 net sales forecast to approximately €28 billion, reflecting continued growth amid market uncertainty. The company remains optimistic about artificial intelligence (AI) developments, though recovery in other segments, particularly logic markets, remains sluggish due to foundry competition and production delays affecting EUV demand.
Dividend and Share Buyback
ASML announced an interim dividend of €1.52 per share, set for payment on November 7, 2024. However, the company did not execute any share repurchases in Q3 2024 under its ongoing 2022-2025 buyback program. Despite market fluctuations, ASML remains committed to delivering value to shareholders.
Long-Term Strategy and Growth
ASML updated its long-term revenue target, forecasting annual revenue between €44 billion and €60 billion by 2030. The company expects a gross margin of 56% to 60%, driven by global market trends and technological advancements.
As per the above-mentioned price action, recent key business and financial updates, and technical indicators analysis, a ‘Buy’ rating has been given to ASML Holding N.V (NASDAQ: ASML) at the closing market price of USD 712.65 as of January 29, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Semiconductor Equipment & Materials
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| ASML ASML Holding NV ADR |
3.06 0.46% | 665.69 | 49.01 | 44.05 | 13.98 | 26.27 | 13.85 | 38.25 |
| ASMLF ASML Holding NV |
4.95 0.75% | 666.00 | 35.84 | 34.36 | 10.90 | 22.09 | 10.98 | 30.93 |
| AMAT Applied Materials Inc |
0.17 0.12% | 145.29 | 22.32 | 20.00 | 5.84 | 8.22 | 5.64 | 17.45 |
| KLAC KLA-Tencor Corporation |
-2.8 0.41% | 677.00 | 40.82 | 25.71 | 9.52 | 30.25 | 9.80 | 24.77 |
| LRCX Lam Research Corp |
-0.27 0.37% | 72.43 | 26.38 | 21.79 | 6.73 | 12.20 | 6.56 | 19.75 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is January 29, 2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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