We
raise
wide-moat
ASML’s
(ASML)
fair
value
estimate
to
€900
from
€790
as
we
increase
our
long-term
revenue
and
EBIT
forecasts.
While
our
2025
estimates
remain
unchanged
we
raise
our
long-term
revenue
forecasts
due
to
higher
confidence
in
ASML’s
long-term
prospects
and
better
certainty
of
high-NA
extreme
ultraviolet
adoption.
Our
fair
value
represents
a
2025
P/E
ratio
of
31.5
times.
Our
forecast
was
already
at
the
high
end
of
management’s
2030
guidance
given
their
outlook
seemed
a
bit
outdated
as
it
was
launched
in
November
2022,
prior
to
the
artificial
intelligence
boom.
With
ASML’s
2030
revenue
target
spanning
a
wide
range
(€44
billion-€60
billion),
we
are
confident
it
will
get
close
to
the
high
end
of
its
guidance
and
assume
€58.5
billion
(£49.77
billion)
in
sales
compared
with
€56.7
billion
previously.
We’re
also
raising
our
stage
2
EBI
growth
rate
assumption
to
9%,
from
7%
previously,
given
the
semiconductor
road
map
for
node
shrinking
is
set
for
the
next
20
years.
Lithography
intensity
will
continue
growing
in
logic
and
memory
markets
as
semiconductor
patterns
keep
shrinking
and
transistors
move
to
3D
structures.
Will
TSMC
Buy
a
High-NA
EUV
Machine?
Bloomberg
News
also
reported
on
June
5
that
wide-moat
Taiwan
Semiconductor
Manufacturing
(TSMC),
the
world’s
most
advanced
logic
foundry,
will
buy
its
first
high-NA
EUV
machine
by
year-end,
which
commands
a
unit
price
of
€350
million.
This
is
a
departure
from
TSMC’s
previous
narrative
as
in
January
TSMC’s
CEO
and
Chairman
CC
Wei
expressed
reservations
regarding
the
adoption
of
high-NA
EUV.
Wei’s
comments
suggested
the
technology
wasn’t
mature
enough
and
that
TSMC
would
make
“the
right
decision
at
the
right
time”.
Although
TSMC
won’t
adopt
high-NA
EUV
in
a
manufacturing
environment
until
after
2026,
the
news
increases
our
certainty
of
high-NA
EUV
long-term
adoption
given
that
TSMC
is
the
most
sound
foundry
in
the
world,
operationally.
We
surmise
TSMC
didn’t
want
to
fall
behind
Intel
(INTC),
which
became
the
first
to
adopt
high-NA
EUV
in
December
2023.
In
the
near
term,
there
is
uncertainty
about
whether
ASML
will
be
able
to
secure
enough
order
bookings
to
reassure
investors
on
the
2025
guidance.
In
our
view,
any
pullback
on
the
shares
is
a
good
opportunity
to
buy
this
wide-moat
stock,
given
the
long-term
picture
remains
strong.
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