On Friday, BofA Securities expressed a stronger conviction in ASML Holding NV's (AS:ASML:NA) (NASDAQ: ASML) future financial performance, leading to an increased price target on the stock. The new price objective has been set at EUR 1,064.00, up from the previous EUR 904.00, while the firm maintains a Buy rating on the shares.
The upgrade is based on the anticipation that ASML, a key player in the artificial intelligence (AI) ecosystem, will at least meet the mid-point of its 2025 revenue target, which ranges between EUR 30 billion and EUR 40 billion. BofA's projection is at EUR 36 billion, slightly above the consensus of EUR 34.8 billion. This confidence is driven by the rising fundamentals of ASML's Foundry/Logic and Memory customers.
Moreover, the demand for AI accelerators from companies such as AMD (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA), along with the associated HBM memory modules, is expected to generate orders for ASML's Extreme Ultraviolet (EUV) systems beyond the company's projected 2030 capacity of 90 systems. This strong demand scenario could potentially lead to a double in ASML's estimated earnings per share by 2030, reaching EUR 65, which is more than twice the figure projected for 2025.
ASML's critical role in the technology supply chain and its financial prospects could lead to a further re-rating of its stock. The company's next Capital Markets Day, scheduled for November 14, may provide additional insights that could influence the stock's valuation. BofA reiterates its Buy rating, reflecting its positive outlook on the company's growth trajectory and market position.
InvestingPro Insights
Following BofA Securities' recent upgrade of ASML Holding NV's price target, InvestingPro data and tips provide additional context for investors considering the stock's current performance and valuation. ASML's market capitalization stands at a robust $364.51 billion, signaling the company's significant presence in the semiconductor industry.
Despite the positive outlook from BofA, an InvestingPro Tip suggests caution as ASML's stock is currently in overbought territory according to the Relative Strength Index (RSI). This could indicate a potential pullback in the near term, especially considering the stock is trading near its 52-week high, at 99.48% of this peak value. Additionally, the stock's Price/Earnings (P/E) ratio is at 43.42, which may suggest a premium valuation, as it is trading at a high earnings multiple.
Investors should note that ASML has demonstrated strong returns, with a 1-month price total return of 29.1% and a 3-month price total return of 45.73%. This performance aligns with the company's reputation as a prominent player in the Semiconductors & Semiconductor Equipment industry, as highlighted by another InvestingPro Tip.
For those seeking more in-depth analysis, there are over 9 additional InvestingPro Tips available at: https://www.investing.com/pro/ASML. These tips can provide further guidance on ASML's financial health and stock performance. Also, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to InvestingPro, unlocking a vast array of financial insights and data.
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