ASML Secures Buy Rating and Raised Price Target by BofA Securities Analyst

Financial expert Didier Scemama from BofA Securities has confidently maintained a Buy rating on ASML Holding N.V., a frontrunner in the semiconductor industry. Further expressing his optimism, Scemama has elevated the company's price objective from 1,156 euros ($1,213) to 1,302 euros ($1,406).

Positive Forecast for ASML

The analyst's decision follows his revised higher revenue and earnings per share (EPS) forecasts for ASML for the years 2025 and 2026, increasing them by 6% to 9%. This upgrade is backed by a strong belief in growing demands for ASML's Extreme Ultraviolet (EUV) lithography tools and an anticipated rise in gross margins to 54.9%, up from a previous estimate of 54.7%.

Outperforming Market Expectations

Scemama's latest revenue predictions for ASML exceed market consensus by 10% to 7% for 2025 and 2026, respectively, while his EPS estimates are notably 15% to 9% higher. These adjustments highlight the analyst's confidence in ASML's future performance.

Strategic Position in AI and Semiconductor Landscape

ASML is praised as the top selection in the European semiconductor capital goods sector (EU Semicaps), steered by the pivotal role it plays in the construction of Artificial Intelligence (AI) infrastructure. Scemama points out that ASML's EUV technology is critical and irreplaceable in fabricating chips for AI processors and DRAM manufacturers.

Despite the lingering uncertainty regarding foundry orders, the investment rush by large computing firms and enterprises into AI infrastructure suggests a high demand for leading-edge capacity expansions. Furthermore, data from Lam Research Corp indicates that AI servers require substantially more DRAM, logic, and NAND content compared to conventional servers, signaling a greater use of ASML's technology.

Projection of Increased EUV Bookings and Unit Shipments

Anticipating a surge in demand for EUV systems, Scemama uplifts his forecast for EUV bookings for the year 2024, projecting an increase to €9.3 billion from €8.1 billion previously. This adjustment implies a significant jump to 80 EUV unit shipments by 2025. Additionally, the analyst estimates lithography intensiveness for the years 2023 and 2024 to be around 25-26%, exceeding the historical average of 22%, due to increased leading-edge complexities mainly attributable to EUV application.

Nonetheless, the market has witnessed a slight decline in ASML's share price, which saw a 2% drop, resting at $1,031.53 upon the last review.

ASML, semiconductor, lithography