UBS on Wednesday lowered its recommendation for ASML from Buy to Neutral and revised its price target from 1,050 to 900 euros, according to a report by analyst Francois-Xavier Bouvignies.
“Despite ASML being one of the best fundamental stories in the European tech sector, with strong management performance, we downgrade to Neutral,” the analyst said, pointing to weaker earnings growth in the coming years.
Bouvignies expects compound annual growth in earnings per share to be 13 percent between 2025 and 2030, up from 24 percent between 2018 and 2025.
However, Bouvignies acknowledged that there is upside potential in the short term, thanks to the solid outlook for 2025. According to him, this implies a strong inflow of orders in the third quarter.
UBS believes that lithography will account for a smaller share of total wafer fab equipment investment in the coming years. Bouvignies sees its market share peaking at 30 percent in 2025, dropping to 25 percent in 2027, before rising again. “We don’t think the revenue from AI end-users will be enough to absorb this.”
UBS also predicts that Chinese spending on lithography will normalize.
UBS expects a turnover of 50 billion euros for 2030. That is 7 billion euros less than the consensus. ASML itself assumes 44 to 60 billion euros with a margin of 56 to 60 percent. ASML organizes an investors day in November.
On a red Damrak, ASML shares fell by 4.9 percent to 744.70 euros on Wednesday.
