On Monday, Goldman Sachs (NYSE:GS) reiterated its Buy rating on ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML) with a price target of EUR980.00. The firm's confidence in the company is bolstered by strong fourth-quarter order intake and positive indicators from industry peers and customers regarding end-market demand. These factors are expected to contribute to ASML's growth, particularly in 2025, driven by advancements in technology and increased spending in General AI.
ASML's stock has experienced a significant rise, increasing by 19% in USD since its earnings report on January 24, 2024. Despite this increase, Goldman Sachs observes that ASML's performance has still trailed behind its semiconductor capital equipment (semicap) peers over the past 12 months. This suggests potential for further growth, according to the firm's analysis.
In terms of valuation, ASML is currently trading at 28 times its projected 2025 earnings per share (P/E), which represents a 42% premium over the European Tech sector. However, ASML is expected to have a compound annual growth rate (CAGR) in revenue that is approximately 75% higher from 2023 to 2026, along with an estimated 25% higher EBITDA margin for the calendar year 2024, compared to its peers.
Goldman Sachs emphasizes that ASML's current valuation may not fully reflect the company's near-term prospects and the anticipated improvement in AI demand across various end markets, such as Logic and Memory. The firm also highlights ASML's significant competitive advantage in Extreme Ultraviolet (EUV) technology. The introduction of High Numerical Aperture (High NA) tools is expected to support ASML's revenue growth in the latter part of the decade.
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