November 5, 2021 8:00 AM
 — 
3
 min

Weak outlook disappointed investors Copy

buy

Netherlands-based ASML, Europe's largest chip maker, increased its fiscal third quarter net profit by 64%, exceeding market expectations. ASML's revenue in the last fiscal quarter was 5.24 billion euros, compared with 3.96 billion euros in the same period in 2020. The gross margin was 51.7% compared to 47.5% a year earlier and the company's forecast of 51-52%. The company itself expected a figure in the range from 5.2 billion euros to 5.4 billion euros. Net income for the quarter ended October 3 rose to 1.74 billion euros from 1.06 billion euros in the same period a year earlier, significantly better than the market forecast of 1.63 billion euros. According to the company's forecast, in the fourth quarter its revenues will amount to 4.9-5.2 billion euros, with a gross margin of 51-52%. The company will pay an interim dividend of € 1.80 per share.

TIKR:
ASML.NA

PRICE:
707EUR

TARGET PRICE:
850EUR

UPSIDE:
20%

S&P 500
4,672(-0.02%)

WTI СRUDE
79.96 (+0.57%)

10Y UST
1,5729(0.00%)

BITCOIN
$62,007(+0.16%)

As a market leader in the microelectronics industry (manufacturing VLSI, memory chips, flash memory, microprocessors, etc.), ASML has pioneered the adaptation and implementation of Moore's Law for the semiconductor sector. Since the company is the only global developer of EUV (Extreme UV) lithography equipment, we believe that ASML, the company has excellent potential for long-term profit growth. We highly appreciate the prospects for the development of EUV technologies, therefore we like the business of ASML and we recommend the company's shares for purchase. We maintain a positive outlook for the company's business and believe that the fair value of the company's shares is at the level of 850 euros.

ASML is the top supplier of lithography equipment to the global semiconductor industry. ASML has gained share in lithography to over 80% compared to <55% ten years ago. It is also the sole supplier of the next-generation Extreme Ultraviolet (EUV) imaging technology. ASML has done some acquisitions in the past that have enabled the overall margins and top-line. They acquired a supplier, Cymer, to boost the EUV program. Hermes Microvision (E-beam provider) was an acquisition that expanded ASML's footprint in process control.

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