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ASML shares up on Barclays upgrade

Published 2024-07-30, 04:14 a/m
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ASML
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Shares of ASML Holding NV (AS:ASML) rose on Tuesday after Barclays upgraded the stock to ‘Overweight’ from ‘Equal Weight’ and raised its price target to €1150 from €930. The bullish call, which implies a potential upside of around 40%, comes despite recent headwinds faced by the company.

Analysts said that the recent sell-off in ASML shares, driven by concerns over China, the return on investment in AI, and softer-than-expected 2025 outlook, has created an attractive entry point for investors.

While flagging that these issues persist, analysts believe that the market has overreacted, and ASML remains a high-quality name with a strong long-term growth trajectory.

Barclays is particularly optimistic about ASML’s prospects in 2026 and beyond, driven by factors such as increased fab investments, the ramp-up of 2nm chip production, and sustained AI spending.

“We see further double-digit growth in 2027-28,” the brokerage added.

While China remains a key concern, with potential implications for the company’s addressable market, Barclays believes the localization risk for ASML is relatively low. The analysts expect export controls to tighten but not significantly impact the company’s business.

Barclays’ price target increase reflects its revised earnings estimates for 2026. The analysts expect ASML to generate €35 billion in revenue and a gross margin of 53.4% in 2025.

The upcoming Capital Markets Day in November is seen as a potential catalyst for the stock, with the possibility of upward revisions to the company’s long-term guidance.

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