Citi reaffirmed its Buy rating for ASML Holding NV (AS:ASML:NA) (NASDAQ: ASML), maintaining a price target of EUR1,150.00. The reaffirmation follows the company's reported shortfall in third-quarter orders and a reduction in its 2025 guidance. Despite these developments, Citi's endorsement is founded on several key factors that are expected to drive demand and profitability for ASML.
The Buy rating is anchored on the anticipation of accelerated digital transformation, especially the emergence of Artificial Intelligence of Things (AIoT), which is predicted to spur greater demand for ASML's products. Additionally, Citi projects an increase in operational profitability as Extreme Ultraviolet (EUV) technology matures and gains a more substantial presence in both system sales and installed base management.
Citi's valuation of ASML is based on a price-to-earnings growth (PEG) ratio of approximately 1.7 times, which is consistent with other high-growth stocks covered by the firm. This valuation is derived from discounted fiscal year 2027 earnings estimates, reflecting a longer-term outlook that extends beyond 2025 to capture ASML's growth trajectory in areas such as artificial intelligence and semiconductor capital expenditures.
The analytical approach taken by Citi involves projecting ASML's earnings per share (EPS) for the year 2027 and discounting them back to the year 2025. This method is intended to more accurately represent the company's long-term potential in the rapidly evolving sectors of artificial intelligence and semiconductor fabrication, which are increasingly reliant on Big Data and computational platforms.
Citi's assessment underscores ASML's strategic position within the semiconductor industry, where technological advancements and the proliferation of digital applications continue to drive market demand. ASML's focus on EUV technology and its alignment with industry growth areas such as AIoT are central to the firm's optimistic outlook on the stock's performance.
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