Asml Stock

Asml Stock – And update my EPS and revenue estimates based on the company’s 1Q23 results, which beat advance and Wall Street analyst recommendations. But despite the strong results, shares lost 3% in after-market trading after the company reported a decline in new orders.

ASML is one of the most important, if not the most important, company in the global semiconductor industry. With highly advanced UV technology, it enables semiconductor manufacturers to build the world’s most advanced chips. And because the company has a monopoly in this industry, it is incredibly well-positioned to benefit from demand for advanced semiconductors driven by emerging technologies like AI, ML, IoT, and cloud computing. I recommend reading their Investor Day coverage here for an in-depth analysis of ASML, its technology, and its long-term goals.

Asml Stock

Among the big plans that the management has, mainly the expansion of capacity is the work of expanding the organization further, as the demand is still far greater than the current capacity. Therefore, ASML’s growth prospects look incredibly strong. Additionally, the company is posting impressive profit margins, but with revenue outpacing capex, these margins are expected to widen significantly over the next couple of years, leading to EPS growth. Add to that a great shareholder-focused management team that plans to reward shareholders with dividends and share buybacks for years to come, and we have a great investment opportunity. ASML is one of my biggest personal foundations, and for good reason. However, there has been negative news lately. ASML faces short-term headwinds from new Chinese export bans and potential capex budget cuts at its biggest customer, putting pressure on the stock. This means that for long-term investors, I think this company is a no-brainer, and the current weakness of the stock price may be a great opportunity.

Asml Beats Estimates But Sees Some Chipmaker Caution

I last covered ASML in January when the company announced its 4Q22 results. At the stock price at the time, I didn’t see much room for short-term growth, and recommended investors were waiting for a better entry point to start a new position or add to an existing one. Today, the stock is down 8.5% since this article, perhaps giving investors a more attractive entry point as financials remain strong. In this article I present the latest news and financial results and accordingly update my estimates and views on the company.

On the morning of April 19, ASML reported another good financial result as we have seen from the company in recent years. Q1 2023 revenue was €6.7 billion (5% sequentially), above the €6.1 billion to €6.5 billion guidance range that analysts had targeted. This increase in revenue is the result of faster EUV and DUV deployment, which means ASML was able to generate additional revenue this quarter. The company achieved EUV revenue of €2.9 billion, total system revenue of €5.3 billion and embedded fund management revenue of €1.4 billion.

To break it down further, Taiwan (or TSMC (TSM)) accounts for most of the revenue at 49 percent, followed by South Korea (Samsung (OTCPK: SSNLF )) at 26 percent and the United States at 15 percent. And while that may not seem like much, it’s not unlike any other quarterly report where a handful of companies have the financial and manufacturing capacity to purchase the EUV (and DUV) machines that most ASML faces. As a result, ASML has only a small customer base, with TSMC, Intel (INTC) and Samsung being the main customers. And despite some concerns, ASML is a very important UV technology monopoly that has good relationships with these companies and makes these companies dependent on ASML’s technology. However, ASML is highly exposed to geopolitical risks, with China seeking to reclaim Taiwan, which derives 49% of its revenue from that country, any conflict would be highly significant for ASML, and while highly unlikely, it would need investors. You should know. However, there doesn’t seem to be any serious risk or reason to invest in ASML today.

In terms of financial results, ASML posted a gross margin of 50.6 percent, beating management’s guidance of 49-50 percent and beating analysts’ estimates of 49.7 percent. This is mainly a result of the high sales revenue of the implemented system. 1Q23 net profit was 2,000 million euros, showing a net income margin of 29%, resulting in an EPS of 4.96 euros (up 8% yoy). The company closed the quarter with 6.7 billion euros in cash, down from 7.4 billion euros at the end of the previous quarter.

Brief Equities Bottom Up: Asml: Transition To Euv Lithography Should Boost Company’s Top Line And Margins And More

While the results look strong so far, analysts’ attention has been focused on the quarter’s backlog and order intake, with a report earlier this week indicating that giant TSMC planned to cut capital spending this year. The decline of the semiconductor industry will leave its mark on the financial results. Of course, this is not good for ASML, because it may indicate that its large customers are cutting costs, which may lead to lower order increases. However, TSMC released its quarterly results today and confirmed that it still plans to invest between $32 billion and $36 billion and will not reduce its investment plan, which is good news for ASML.

However, for ASML, order intake was not as strong as previous quarters. In the first three months of this year, ASML recorded a net system of 3.8 billion euros, of which 1.6 billion euros came from EUV and 2.2 billion euros from EU reserves. In the previous two quarters, the total net reserves of the system reached 8.9 and 6.3 billion euros. Of course, this slowdown is not surprising given that the current economic pressures are leading to lower spending by major semiconductor manufacturers. Still, this slowdown was more significant than analysts expected, which is the main reason why the stock traded lower in the following session. However, I think the market is overreacting to these numbers. ASML still has a system portfolio of 39 billion euros, which is double the revenue of the previous year. This delay is still incredibly powerful and creates enough buffer for ASML to get through these tough times.

This helps because cancellations are also highly unlikely. As major semiconductor manufacturers cut costs, ASML EUV equipment is in high demand, and manufacturers cannot afford to lose priority back to the end of the line. The backlog is sticky, creating a buffer for ASML to weather these tough times even if order intake slows down. As the economy continues to improve and demand for semiconductors generates higher revenues for companies such as Intel, Samsung and TSMC, ASML orders will quickly increase again.

Investors should note that global headwinds are strong, driven primarily by stimulus from the European Union and the US government. Earlier this week, the European Union confirmed the passage of a €45 billion chip bill to boost the continent’s semiconductor manufacturing and reduce its reliance on Asian manufacturing. As a result, Intel announced in March that it plans to invest 80 billion euros in chip manufacturing in Europe alone, supported by these incentives. And obviously this will be great for ASML as well, because these new factories will have to be equipped with ASML’s most advanced equipment. Additionally, to regain leadership in manufacturing, Intel has pre-ordered ASML’s next-generation EUV systems: High NA EUV. So my view is that ASML sees a very strong global headwind due to increased demand for high quality chip manufacturing driven by AI, IoT, ML and Cloud Computing. ASML still has a monopoly on the EUV equipment needed to produce high-quality chips, making it a major long-term user. Therefore, the short-term decline should not cause any long-term investors.

Asml Holding Stock Forecast, Price & Rating (asml)

Despite significant economic headwinds and risks, ASML continues to enjoy healthy demand for its products, particularly DUV systems. As a result, demand continues to grow beyond ASML’s production capacity, which is positive. Here’s what CEO Peter Wennick had to say about it during the earnings call:

Customers continue to experience weak demand in consumer-driven end markets, prompting the industry to actively reduce inventories and reduce utilization of its production base, while demand in other markets such as automotive and industrial is relatively strong.

ASML continues to focus on capacity expansion to meet growing demand. With this, ASML continues to believe in its long-term financial goals outlined below. This shows significant improvement in margins as revenues exceed capex and impressive revenue growth.

Finally, ASML does not forget its shareholders. It has increased its dividend by 5.5% and from its current price of €567, the shares have gained just over 1%. from

Asml Stock Photos

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