On Friday, a Citi analyst revised the price target on ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML) to €930 from the previous €1,150 while continuing to recommend a Buy rating on the stock. This adjustment comes after ASML announced expectations of not meeting or reaching the high end of its targeted ranges for the first time since the company started its biennial Capital Markets Days in 2012.
The reduced target reflects the impact of a material guidance cut, attributed to the cycle timing and technology challenges faced by two of ASML's key customers. Despite this development potentially shaking investor confidence, the analyst believes it does not significantly alter ASML's long-term growth narrative.
Gardiner emphasizes that, although the November Capital Markets Day may not be the positive catalyst initially anticipated, the expectation for high-teens earnings per share (EPS) growth through the end of the decade remains intact. This growth prospect is seen as a foundation for sustaining a healthy stock multiple.
The current valuation of ASML at 26 times and 22 times its estimated 2025 and 2026 price-to-earnings (P/E) respectively, is considered attractive when compared to historical ranges. This valuation underpins the decision to maintain the Buy rating despite the lowered price target and the recent setback.
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