Dutch semiconductor company ASML Holding NV (DE:ASME) exceeded Q4 FY23 expectations but cautioned about flat sales for Fiscal 2024. In Q4 FY23, ASML’s sales of €7.24 billion rose 12.5% year-over-year, while net profit jumped 12.7% to €2.05 billion. ASME shares were up 6.2% on the news as of the last check, hitting a fresh 52-week high of €758.
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ASML NV is one of the largest manufacturers of semiconductor equipment used to produce some of the most advanced chips in the world. The company is caught in the crosshairs of the U.S.-China trade war, with more and more curbs being implemented on its product exports to the mainland. ASME shares have gained over 22% in the past year.
Details About ASML’s FY23 Performance
For FY23, ASML reported a significant jump of 30% in sales to €27.56 billion, with a gross margin of 51.3% and net profits of €7.84 billion. However, ASML expects sales to remain flat in Fiscal 2024. Meanwhile, in Q1 FY24, net sales are projected between €5.0 billion and €5.5 billion, with a lower gross margin of around 48%.
ASML is foreseeing a slow recovery in the chip market this year, with customer inventory levels declining and demand for the equipment slowly gaining momentum. ASML is maintaining a conservative outlook for Fiscal 2024 and calls it a year of transition with higher growth expected in 2025. Also, ASML’s board intends to announce a final dividend of €1.75 per share for FY23, bringing its total annual dividend to €6.10 per share.
Like other semiconductor companies, ASML is also facing pressure from the ongoing U.S.-China chip war. Recently, the Dutch government partially revoked ASML’s license for shipping NXT:2050i and NXT:2100i lithography systems to China. These machines were used to manufacture less advanced chips and hence, ASML sees no possibility of exporting any high-end machines to China in the future. CFO Roger Dassen said that the company expects a 10% to 15% impact on its 2024 China sales because of these bans.
Is ASML Stock a Buy or Sell?
Following ASML’s Q4 FY23 print, several analysts revived their view on the stock. A total of six analysts reiterated their Buy ratings, while only Barclays analyst Simon Coles stuck to his Hold rating on the stock with a price target of €610 (13.8% downside).
Overall, ASML stock commands a Strong Buy consensus rating backed by 11 Buys versus two Hold ratings. The ASML NV share price target of €771.66 implies 9% upside potential from current levels.
