ASML Holding N.V. (NASDAQ:ASML) specializes in making semiconductor equipment systems for the manufacturers of logic boards and memory chips. Headquartered in the Netherlands, the company has operations in the U.S., Europe, Japan, Taiwan, Singapore, South Korea, and multiple other countries. ASML is a well-rooted company in the semiconductor space, and its solid growth prospects could attract prospective investors.
In the past five years, shares of this $188.2 billion company have surged 183.9%. However, the stock lost 44% in the past year due to industry headwinds like cost inflation and supply-chain bottlenecks.
On TipRanks, analysts are optimistic about the prospects of ASML, which commands a Strong Buy consensus rating based on three unanimous Buys.
ASML’s average price forecast is $661.33, representing upside potential of 40.38% from the current price level of $471.11. The highest price target is $794, and the lowest is $590.
Now, let’s look at the factors that enhance the company’s investment appeal.
What’s Special about ASML Stock?
In the years ahead, ASML looks well-positioned to benefit from the megatrends in the semiconductor industry, which include 5G & infrastructure, cloud, intelligent edge, artificial intelligence, gaming, simulations, and visualization. The company anticipates the semiconductor market to be worth $667 billion by 2025, representing a CAGR of 7.4% from 2020, and $941 billion by 2030.
Further, the company predicts the smartphone end market to be worth $210 billion by 2030. It also sees the consumer electronics market size touching $98 billion for semiconductors during this period.
ASML anticipates the size of the automotive market to be $131 billion, personal computing to be $132 billion, industrial electronics to be $119 billion, and servers and data centers to be $187 billion by 2030.
In addition to these large addressable markets, ASML could also benefit from the U.S. government’s plan to invest $52 billion in domestic chip manufacturing companies and give tax credits of $24 billion under the CHIPS ACT of 2022.
To leverage such growth opportunities, ASML is working to expand its wafer manufacturing capabilities and sharpen its innovative skills. It increased its research and development expenses by 21.25% year-over-year and invested 9.5% more in capital expenditure in the first half of 2022. Further, it paid huge amounts on dividend distribution and share buybacks during the first half of 2022. Such shareholder-friendly initiatives are being followed by the company to keep its stakeholders contended.
In July, ASML’s President and CEO, Peter Wennink, said, “Some customers are indicating signs of slowing demand in certain consumer-driven market segments, yet we still see strong demand for our systems, driven by global megatrends in automotive, high-performance computing, and green energy transition.”
For 2022, the company anticipates sales to grow roughly 10% year-over-year. The gross margin is expected to be within the 49%-50% range.
Top Investors Are Very Positive about ASML Stock
According to TipRanks, top retail investors look Very Positive about the prospects of ASML stock. They have increased their exposure to ASML stock by 5.1% in the last 30 days.
From the above discussion, it is evident that ASML stock has all the right ingredients in place, making it an attractive investment option for prospective investors. However, before proceeding any further investors should know that the company has a neutral Smart Score of seven out of 10 on TipRanks, implying that ASML stock may perform in line with the broader market in the near term.
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