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ASML (NASDAQ:ASML) disappointed investors when it reset expectations to flat sales for 2024, but 2025 is looking pretty good, analysts said.
Bank of America reiterated a Buy rating on the Dutch semiconductor capital equipment company even as it dropped 4.7% on Wednesday, calling it an EU Semicap top pick.
“Crucially ASML reiterated their 2025 revenue guide (€30-40bn), which implies a significant growth acceleration (sales +19% yoy),” analysts led by Didier Scemama wrote in a note. However, sales for 2024 will be similar to this year amid uncertain demand.
The company is also facing issues with sales in China, which have surged of late, as the U.S. Commerce Department this week expanded its export controls on semiconductors. The agency restricted the sale of chips designed specifically for the Chinese market, impacting ASML (ASML) and other semiconductor capital equipment firms, as well as semiconductor companies like Nvidia (NVDA), AMD (AMD) and others.
ASML said on Tuesday the export control measures will likely have an impact on the regional split of its systems sales in the medium- to long-term. However, it does not expect these curbs to have a material impact on its outlook for 2023 and for its longer-term scenarios for 2025 and 2030.
On Wednesday, ASML (ASML) lowered expectations for next year to no sales growth compared to a prior expectation of “growth,” BoA said. The firm cut its estimate to growth of -1% last month as a result of restrictions on exporting to China and lower order with a slower-than-expected recovery in smartphones and PCs.
Bank of America also flagged the increase in sales to China, driven by rush orders.
Citi said the report from ASML “clears the way for a return to share price appreciation.” The bank, which has a Buy rating on the stock, said management clearly acknowledged near-term economic pressures and geopolitics with its guide to flat sales in 2024. For 2025, the company sees “significant” growth.
Citi estimated 40% growth that year of 38.7B euros.
Shares are trading on an “historically undemanding” 17x Citi’s 2025 EPS estimate.
The company’s 2025 guidance is driven by secular trends, a cyclical upturn, continued increase in litho intensity and new fab openings, Citi said.
Wells Fargo was less impressed, saying that ASML’s extreme ultraviolet lithography technology bookings are weak and record China revenue — amid impending new restrictions — remain key points of focus.
