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ASML Holding NV ASML

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ASML Increases Revenue Growth Outlook for 2021 Again; Raising Fair Value Estimate to $635

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

ASML reported solid second-quarter results, with revenue at the low end of management’s guidance and slightly below our expectations. We note the firm had EUR 300 million in sales shifted from the second quarter to the third quarter due to two EUV tools being shipped but without a factory acceptance test needed to recognize revenue. Beyond this accounting quirk, ASML continues to benefit from robust equipment sales, with 2021 sales now expected to be up 35% (up from 30% last quarter). Thanks to bold spending plans by major customers such as TSMC and Intel, ASML’s logic and foundry revenue is expected to be up 35% in 2021 (up from 30%). CEO Peter Wennink anticipates memory sales will be up 60% in 2021 (up from 50%), including EUR 1 billion in EUV sales to DRAM customers. Despite EUV not meaningfully being implemented in DRAM manufacturing presently, customers such as Samsung, SK Hynix, and more recently Micron are all committed to deploying the advanced lithography technology in their future DRAM processes. We are raising our fair value estimate for wide-moat ASML to $635 per share from $600 (and EUR 527 per share from EUR 498), as industry adoption of EUV is set to accelerate both this year and beyond.

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Company Profile

Business Description

Founded in 1984 and based in the Netherlands, ASML is a leading manufacturer of photolithography systems used in the manufacturing of semiconductors. Photolithography is the process in which a light source is used to expose circuit patterns from a photomask onto a semiconductor wafer. The latest technological advances in this segment allow chipmakers to continually increase the number of transistors on the same area of silicon, with lithography historically representing a meaningful portion of the cost of making cutting-edge chips. Chipmakers require next-generation EUV lithography tools from ASML to continue past the 7-nanometer process node. ASML's products are used at every major semiconductor manufacturer, including Intel, Samsung, and TSMC.

Contact
De Run 6501
Veldhoven, NB, 5504 DR, Netherlands
T +31 402683000
Sector Technology
Industry Semiconductor Equipment & Materials
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 29,386

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