ASML : Taking a breather
We raise our EPS estimates by 14-18% largely on the back of more bullish expectations on EUV adoption and better prospects in Memory. Our estimate upgrade includes 1-2% higher ASPs, 3-4% increase in system sales, and 3-4ppt improved GMs. With ASML being the only manufacturer of strategically important, leading edge technology for lithography systems, which allows it to have more visibility than any other equipment maker, we believe a premium is justified vs. its peers. However, whereas the premium vs WFE front-end peers is as high as 70-90%, ASML also trades at 60% premium vs. its own 5-year historical average. Our target of 36x 2022e EV/EBIT, equivalent to a 80% premium to WFE front-end peers, values the company at € 475p. We rate HOLD.ASM International is an equipment supplier mainly to the semiconductor manufacturing industry. Co. designs, manufactures and sells equipment and services to its customers for the production of semiconductor devices, or integrated circuits. Co.'s front-end segment manufactures and sells equipment used in wafer processing, encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. Co.'s back-end segment manufactures and sells equipment and materials used in assembly and packaging, encompassing the processes in which silicon wafers are separated into individual circuits and subsequently assembled, packaged and tested.
ASML Holding provides lithography systems for the semiconductor industry, manufacturing machines that are used in the production of integrated circuits or chips. Co. develops, produces, markets, sells and services advanced semiconductor equipment systems exclusively consisting of lithography systems. Co. sells its products to micro-processor manufacturers and Foundries, NAND-Flash memory and DRAM memory chipmakers. Co.'s products line includes the following: PAS 5000 lithography systems, which Co. no longer manufactures but continues to refurbish; PAS 5500 products; TWINSCAN DUV systems and TWINSCAN EUV systems based on a new platform utilizing the concepts of the TWINSCAN platform.
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