A Buy rating has recently been issued to large-cap semiconductor maker ASML Holding N.V. (ASML) by Zacks senior semiconductor analyst Ken Nagy, CFA. We bring you his latest update:
'ASML is the largest OEM (original equipment manufacturer) of advanced photolithography systems used within the semiconductor manufacturing industry. September quarter revenue and EPS were in-line with consensus estimates. Going forward we expect revenue to climb as ASML continues to win market share. The company has the leading position in the next generation immersion lithography tools, which will lead to long-term growth.
'Shares of ASML are currently trading at a 20.8x multiple of our 2008 EPADR estimate (P/E). The new tools successfully introduced in the first half of 2005 should drive long-term revenue growth, especially at lower design geometries where it appears immersion lithography will be the key technology. The current backlog is heavily weighted towards the leading edge 300mm and 193nm systems.
'While these technology orders are important, industry capacity expansion is essential for further top-line growth. Industry opinion currently projects semiconductor growth of between 4% and 10% for 2007, depending on the source, and growing +10% in 2008. Orders are expected to increase based on ASML building its market share. We are reiterating our buy rating on the shares of ASML. Consequently, we are setting our $38.00 price target, which corresponds to a 23.1x P/E.'
Read the analyst report on ASML
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