Shares in ASML (ASML) extended losses by 4% on Wednesday morning following a 16% decline on Tuesday, after the firm prematurely released third-quarter results showing a slow-down in orders and a reduction to 2025 net sales guidance.
Order intake came in at EUR2.63 billion, down from EUR5.57 billion recorded in the second quarter this year. Morningstar analyst Javier Correonero, in his preview on the results, had cited around EUR4 billion as an order level needed to meet the midpoint of ASML’s 2025 guidance of EUR30 to EUR40 billion for 2025.
ASML CEO Christophe Fouquet said: “We expect our 2025 total net sales to grow to a range between €30 billion and €35 billion, which is the lower half of the range that we provided at our 2022 Investor Day.”
“While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover. It now appears the recovery is more gradual than previously expected. This is expected to continue in 2025, which is leading to customer cautiousness,” Fouquet said in the Q3 press release. “The competitive foundry dynamics have resulted in a slower ramp of new nodes at certain customers, leading to several fab push outs and resulting changes in litho demand timing, in particular EUV.”
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Analyst: Javier Correonero
‘Two Main Things that Disappoint’
Following Tuesday afternoon’s inadvertent early release of the results, Morningstar analyst Correonero cited “two main things that disappointed investors. First, ASML would lower its 2025 revenue guidance, and would now expect revenue to be in the EUR30 to EUR35 billion range. Although this falls inside management’s EUR30 to 40 billion target set at the 2022 Investor Day, most investors were expecting results to be in the mid-point of the guided range, and management commentary in the past two quarters was pointing towards reaching the mid-point of the guidance. Gross margins would also be weaker, In the 51% to 53% range, compared to management’s target of 54% to 56%. Our estimate, prior to this release, was EUR36 billion in revenue at a 54% gross margin.”
“Second, third quarter orders came in weak, at EUR2.6 billion versus expectations of around EUR5 billion, as logic foundries are ramping up new nodes at a slower pace than expected, and ASML sees little capacity additions in memory so far. This last remark is in contrast to Micron’s Technology comments in September 26th, when management indicated they expected higher fab equipment spending in 2025.”
“We are not changing our fair value estimate until news become official tomorrow, but should the leaked scenario materialize, we would cut our fair value estimate by 5% to 10%, as we would moderate both our 2025 and 2030 targets. Still, we believe that ASML is a good buying opportunity for long-term investors after thus strong pullback,” Correonero said.
ASML’s revenues for the quarter came in at EUR7.47 billion, above the range of EUR6.7 to EUR7.3 billion ASML had communicated at their Q2 results. Net income was EUR2.08 billion, compared to EUR1.58 billion in the second quarter.
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