JP Morgan has flagged ASML's third-quarter results as a potential catalyst for the Dutch semiconductor equipment maker's shares, arguing the stock is trading at an unwarranted discount that could reverse if the company delivers an upbeat outlook for 2027.
Analyst Sandeep Deshpande said ASML has outperformed its semiconductor equipment peers over the past quarter despite a weak broader tape, yet the stock continues to trade at a multiple more consistent with a semiconductor downturn, despite no evidence of rising inventories or softening demand.
The bank expects ASML to provide initial guidance for 2027 alongside its third-quarter results, as it has done in each of the past two October reporting seasons.
JP Morgan believes ASML's order book for extreme ultraviolet (EUV) lithography tools in 2027 is already fully booked, with the company now actively taking orders for 2028, pointing to exceptional forward visibility.
Bloomberg consensus currently forecasts ASML sales growth of around 28% in 2027, but JP Morgan's own wafer fabrication equipment (WFE) estimates point to industry spending of $224.5 billion in 2027, up 38% year on year, suggesting meaningful upside to current ASML consensus forecasts if that materialises.
ASML has indicated it expects to ship around 85 EUV tools and 169 deep ultraviolet (DUV) immersion tools in 2027, with Deshpande flagging potential upside to both figures if the company's supply chain can keep pace with demand.
The broker said the combination of robust order trends, strong visibility, and a valuation that appears to price in a downturn that is not materialising creates a compelling setup.
ASML reports third-quarter results later this month.
