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ASML Sets Stellar Growth Target for 2022 Led by EUV; Raising FVE to $800, Shares Highly Attractive

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

ASML reported solid fourth-quarter results, with revenue at the low end of management’s guidance but slightly lower than our expectations due to delayed system shipments resulting from materials shortages in the supply chain. Although ASML's first-quarter outlook is negatively impacted by fast shipments (systems that ship to a customer but do not complete factory acceptance testing), management is optimistic ASML can achieve 20% revenue growth in 2022, which is ahead of our expectations. While we anticipated strong EUV growth thanks to robust demand from TSMC and Intel, non-EUV system revenue is expected to grow over 20% due to broad-based demand from lagging-edge technologies and memory in addition to leading-edge logic and foundry customers. After rolling our model forward and incorporating stronger growth assumptions for 2022, we are raising our fair value estimate for wide-moat ASML to $800 per share from $715 (and EUR 696 per share from EUR 607). With the recent sell-off in technology stocks, we view shares of ASML as highly attractive.

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Company Profile

Business Description

Founded in 1984 and based in the Netherlands, ASML is the leader in photolithography systems used in the manufacturing of semiconductors. Photolithography is the process in which a light source is used to expose circuit patterns from a photomask onto a semiconductor wafer. The latest technological advances in this segment allow chipmakers to continually increase the number of transistors on the same area of silicon, with lithography historically representing a meaningful portion of the cost of making cutting-edge chips. Chipmakers require next-generation EUV lithography tools from ASML to continue past the 5-nanometer process node. ASML's products are used at every major semiconductor manufacturer, including Intel, Samsung, and TSMC.

De Run 6501
Veldhoven, NB, 5504 DR, Netherlands
T +31 402683000
Sector Technology
Industry Semiconductor Equipment & Materials
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 32,016