Take the knife or take advantage of the opportunity to get a sweet price? Analyst after ASML collapse: Strong buy on non-structural issues | Anue Juheng-US Stock Radar

ASML announced disappointing third-quarter results this week, causing most of the semiconductor industry to drop as much as 16% on Tuesday, a reason to believe ASML’s decline is overblown.

Chip manufacturing equipment company ASML (ASML-US) lowered the outlook for 2025, citing a slow recovery in some areas of the chip market.

The drop after the announcement reflected the market’s surprise at their expectations. ASML currently expects total net sales in 2025 to be between 30 billion and 35 billionEURbetween, which means that it could be much lower than the previous 35.8 billionEURconsensus estimate.

The level of downward revision of financial forecasts has caused speculation in the market.

1. Samsung Electronics and Intel will have slower consumption: Both companies have reduced spending on ASML’s most advanced ultraviolet (EUV) lithography equipment, which could affect ASML’s prospects.

2. Decline in Chinese orders: As the United States and the Netherlands tighten export restrictions to China, ASML expects orders from China to drop significantly, affecting its revenue prospects.

Morningstar analyst Javier Correonero pointed out in his research report that Intel is at the heart of ASML’s weak outlook because Intel has delayed its plan to build a wafer fab in Magdeburg, Germany, by two years, and may that there will be more delays and disputes. the future. In September of this year, Samsung issued a letter apologizing to investors for its recent poor technical performance. “As a result, we believe both companies may be more cautious about the outlook for 2025.”

However, Correonero believes that now is a “good time” to buy ASML, citing its positive long-term outlook that outweighs the uncertainty of next year. He raised his estimate of the fair value of ASML’s Amsterdam-listed shares from a previous estimate of 900 EURReduced to 850 EUR.

Regardless of the expectations of Samsung and Intel, issues related to China are the biggest problem facing ASML, because since 2019, ASML has been banned from issuing the their most advanced EUV technology to China. However, Chinese companies have started collecting old deep ultraviolet (DUV) devices, with the risk that the United States and the Netherlands could tighten export restrictions.

ASML predicts that by 2025, revenue from the Chinese market will account for 20% of the group’s total revenue, well below the recent high of 40% Wall Street analysts say ASML’s forecast for the Chinese market shows the company has accepted further restrictions on its ability to sell and repair machinery to Chinese customers.

UBS analyst Srini Pajjuri said that while he was disappointed with ASML’s results, he did not believe there was a structural problem and believed it was close to the minimum order level, along with the EUV monopoly and artificial intelligence demand long-term generation with an attractive valuation, the company’s risk-reward profile is very attractive.

Pajjuri lowered his target price on ASML’s American Depositary Receipts (ADRs) to $900 from $1,100, but maintained a “Strong Buy” rating on the ADRs.

ASML ADR rose 2.5% on Thursday to close at $700.60 a share, still down more than 7% year to date.