ASML up 30% in three months, but more to come
ASML (ASML:AMS) €342.9
Gain to date: 29.6%
Original entry point: Buy at €264.6, 23 April 2020
The global microchip industry seems to be in rude health judging by ASML’s second quarter figures on 15 July. There was certainly no hint of any threat of orders being delayed this year because of the pandemic as net profit rose sharply, driven by higher sales and improving margins.
ASML, the Dutch supplier of crucial equipment to semiconductor giants like Samsung, TSMC and Nvidia, beat analyst expectations for the quarter and insisted 2020 will be a growth year.
Analysts are anticipating 13% sales growth in 2020, impressive given the disruption of Covid-19 to business globally, and Liberum is now forecasting an acceleration to 19% in 2021.
ASML made a quarterly net profit of €751 million compared with €476 million in the equivalent 2019 quarter, on net sales up from €2.57 billion to €3.33 billion.
That the stock dipped 3.5% on the day says more about the sharp rally to more than €340 since we flagged the discounted buying opportunity three months ago.
‘We presently forecast gross margins to rise to 51.1% and 53% in 2021 and 2022, from an estimated 47.8% in 2020,’ said Liberum analyst Janardan Menon, largely thanks to new platforms on ASML’s core extreme ultraviolet lithography and other technology ranges.
SHARES SAYS: It has already hit the €340 target we initially flagged but you should continue buying this fine company.