ASML’s (ASML.AS,ASML.US) earnings growth is set to accelerate further in the next few years, reflecting the strong recovery of its order book amid better tool utilization and a new product cycle, Morgan Stanley said Tuesday.
As such, analysts reiterated their overweight rating on the stock and raised the price target to 1,000 euros from 875 euros.
From 2023 to 2026, analysts expect an earnings compound annual growth rate of 23%, resulting in sales of over 39 billion euros at the end of the forecast period. Morgan Stanley views ASML as the “clear winner” among European semiconductor companies, citing its new product cycle, current capex rebound and improved installed base dynamics despite slowing sales growth and diminishing margins in 2024.
Analysts noted that the ongoing artificial intelligence boom is contributing to the attractiveness of the semiconductor sector, resulting in a capacity build-out among companies. As a result, the Dutch semiconductor equipment maker will likely face the challenge of quickly boosting capacity to meet a surge in demand over 2025 to 2026.