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ASML Beats Earnings Estimates But Misses Sales

Semiconductor equipment leader ASML (ASML) exceeded earnings expectations in the first quarter but fell short on sales. Its guidance for the future also did not meet expectations, causing ASML stock to decrease.

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The Dutch company reported earnings equivalent to $3.31 a share on sales of $5.63 billion in the March quarter. ASML provides financial results in euros. Analysts surveyed by FactSet had anticipated ASML earnings of $3.15 a share on sales of $5.87 billion. Comparatively, in the same period last year, ASML posted earnings of $5.44 a share on sales of $7.39 billion, as per FactSet.

For the upcoming quarter, ASML forecasted sales of $6.33 billion, based on the midpoint of its guidance. Analysts had been projecting $6.89 billion for the second quarter. In the prior year’s equivalent period, ASML recorded sales amounting to $7.72 billion.

The firm, headquartered in the Netherlands, specializes in creating advanced lithography equipment used for imprinting minute circuits onto semiconductors.

ASML Leaves Full-Year Outlook Unchanged

Following the news, ASML stock experienced a 7.1% decline, closing at 907.61. The report from ASML triggered a drop in semiconductor stocks, with the Philadelphia semiconductor index decreasing by 3.3% on Wednesday.

In a press release, Chief Executive Peter Wennink stated, “Our outlook for the full year 2024 remains consistent, with expectations of a stronger second half compared to the first half as the industry continues to recover from the downturn.” Wennink also mentioned, “We view 2024 as a transitional year with ongoing investments in capacity ramp and technology to prepare for the cycle’s turn.”

Wall Street Reactions To the Report

Raymond James analyst Srini Pajjuri reiterated his strong buy rating on ASML stock, raising his price target from 1,000 to 1,100.

In a communication to clients, Pajjuri attributed the Q1 sales shortfall to “quarter-to-quarter lumpiness” rather than a demand issue. He anticipated that ASML’s 2024 sales would benefit from increasing demand, the generative AI megatrend, and U.S. Chips Act subsidies.

CFRA Research analyst Brooks Idlet maintained his buy rating on ASML stock but adjusted his price target to 1,013 from 1,033.

“We see heightened China demand (49% of net system sales in Q1 compared to 39% in the previous quarter) as a risk due to ongoing geopolitical tensions/posturing,” Idlet mentioned in a client communication. “Nevertheless, we are confident that other countries can step in to fill the gap in case of further export controls.”

ASML Stock Listing on Four IBD Lists

Bernstein analyst Sara Russo sustained her outperform rating on ASML stock, with a price target of 1,052.

“Despite bookings and guidance falling short of expectations, we continue to believe in the setup for a stronger second-half of 2024 and substantial growth in 2025,” Russo conveyed in a client note. “ASML is continuously building a solid backlog to support the anticipated growth.”

ASML stock is featured on five IBD lists: Leaderboard, IBD 50, Big Cap 20, Global Leaders, and Tech Leaders.

Prior to the earnings release, ASML stock had formed a flat base with a buy point of 1,056.34, according to IBD MarketSurge charts.

Follow Patrick Seitz on X, previously Twitter, at @IBD_PSeitz for more stories on consumer technology, software, and semiconductor stocks.

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