As ASML Holding NV (NASDAQ:ASML) shares fell in Amsterdam and New York pre-market trading on a downgrade of 2024 guidance, Bank of America was looking another year ahead and added the stock as its 'top pick' in the European semiconductor sector.
Other investment banks also saw the reset guidance, where ASML warned that revenues are likely to be flat in 2024 versus its prior guide of “growth”, as a positive turning point.
In a note entitled 'This is the reset you were looking for', BofA analysts said they had been expecting the semiconductor machinery giant to recalibrate expectations, but thought it would come at the start of next year.
"Crucially", they said, the Dutch company reiterated its 2025 revenue guidance for €30-40 billion, "which implies a significant growth acceleration" in sales of around 19%.
Based on BofA's 2025 estimates, the shares trade for 22 times earnings and 18 times on an EV/EBITDA basis, "which we consider highly attractive", leading the US bank to reiterate its 'buy' rating with a €750 'price objective'.
Similarly, Citi analysts also said the company's framing of 2024 and 2025 "is as we expected and we argue clears the way for a return to share price appreciation".
"We view today’s announcement as the clearing event for which many investors were waiting," the Citi note said, with a 'buy' rating and €780 target price reiterated.
JPMorgan said "the stock may be initially down on the very weak order intake but the more the market believes that this is the reset, the stock would have bottomed even if immediate returns may be too early to ask for".