On Monday, Citi maintained its Buy rating on shares of ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML) with a steady price target of €1,250.00. The firm anticipates multiple positive catalysts for ASML in the second half of 2024, which could lead to an uptick in consensus estimates for the years 2025, 2026, and 2030.
ASML, a key player in the semiconductor industry, is expected to benefit from a range of growth drivers including a potential order from TSMC for its N2 technology, which Citi predicts could occur in the second or third quarter of 2024. Moreover, the firm foresees a structural demand in logic and DRAM markets, a cyclical upturn, and increased sovereign investments contributing to ASML's revenue growth.
For the year 2025, Citi projects ASML's revenue to be between €35-40 billion. This forecast is bolstered by the anticipated late ramp-up of TSMC's N2 in the fourth quarter of 2025, heightened demand for High Bandwidth (NASDAQ:BAND) Memory (HBM), and a significant uptick in new fabrication plants, as indicated by Citi's proprietary analysis.
Looking ahead to 2026, Citi estimates ASML's revenue to reach €42 billion, a figure that is approximately 5% higher than the consensus. The firm also predicts a 15% increase in the midpoint of the projected 2030 revenue range, from €52 billion to approximately €60 billion. This adjustment is attributed to the growing needs for Artificial Intelligence (AI) and the global trend towards sovereign investment and re-shoring of semiconductor manufacturing.
Citi emphasizes that ASML's valuation, when adjusted for growth, is currently more favorable than that of its industry peers. This assessment reaffirms the firm's decision to include ASML on its Focus List with a Buy rating and a €1,250 price target.
In other recent news, ASML, the world's leading supplier of chipmaking equipment, saw its shares reach an all-time high amid growing optimism about its top customer, Taiwan Semiconductor Manufacturing Company (TSMC).
Analysts from Morgan Stanley (NYSE:MS) and JPMorgan (NYSE:JPM) released positive notes about TSMC, contributing to the bullish sentiment around ASML. The company stands as Europe's third most valuable, with a market capitalization of 390 billion euros. Investors are eagerly awaiting upcoming financial disclosures from both companies.
In an interview with BNR, former ASML CEO Peter Wennink shared insights on the ongoing US-China chip dispute, describing it as ideologically driven and likely to persist. ASML has a 30-year presence in China and has been navigating stakeholder interests amidst these ideological tensions.
Marjorie Taylor Greene, a congress member from Georgia's 14th congressional district, recently made new investments, including purchasing stocks in ASML. These transactions were disclosed promptly in line with the STOCK Act, which requires members of Congress to disclose their trades.
Deutsche Bank (ETR:DBKGn) demonstrated confidence in ASML, increasing the price target on the stock and maintaining a Buy rating. The firm's analyst anticipates that ASML's shares will continue to perform well leading up to its Capital Markets Day in November.
Lastly, ASML spearheaded a rally in European shares, with its shares soaring by 8.1% following a report from a Jefferies analyst, which referenced comments from ASML's CFO, Roger Dassen, expressing optimism about potential upcoming orders from TSMC.
InvestingPro Insights
In alignment with Citi's optimistic outlook on ASML Holding NV, current InvestingPro data corroborates the strong position of ASML in the semiconductor sector. ASML's market capitalization stands at a robust $425.04 billion, reflecting its significant market presence.
The company's P/E ratio is currently at 55.17, indicating a premium valuation which aligns with Citi's note on ASML trading at a high earnings multiple. Despite the high P/E ratio, ASML is a prominent player in its industry, a factor that could justify its valuation to investors.
Moreover, with a revenue growth of 7.04% over the last twelve months as of Q1 2024, ASML exhibits a healthy expansion trajectory. This growth is further supported by a strong gross profit margin of 51.41%, showcasing the company's ability to maintain profitability.
InvestingPro Tips suggest that ASML's cash flows can sufficiently cover interest payments, and the company has a history of maintaining dividend payments for 18 consecutive years, which may be appealing to income-focused investors.
For those seeking more in-depth analysis, InvestingPro offers a range of additional tips on ASML, including its debt levels, trading multiples, and analyst profitability predictions. Subscribers can access these insights and more by using coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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