Semiconductor equipment leader ASML early Wednesday beat estimates for earnings in the first quarter but missed views on sales. Its guidance also was below expectations. ASML stock fell on the news.
The Dutch company earned the equivalent of $3.31 a share on sales of $5.63 billion in the March quarter. ASML reports financial results in euros. Analysts polled by FactSet had expected ASML earnings of $3.15 a share on sales of $5.87 billion. In the year-earlier period, ASML earned $5.44 a share on sales of $7.39 billion, FactSet said.
For the current quarter, ASML predicted sales of $6.33 billion, based on the midpoint of its guidance. Analysts had been looking for $6.89 billion in the second quarter. In the same period last year, ASML's sales totaled $7.72 billion.
The Netherlands-based company makes advanced lithography equipment for etching tiny circuits onto semiconductors.
Leaves Full-Year Outlook Intact
On the stock market today, ASML stock fell 7.1% to close at 907.61. ASML's report sparked a sell-off in semiconductor stocks. The Philadelphia semiconductor index slid 3.3% on Wednesday.
"Our outlook for the full year 2024 is unchanged, with the second half of the year expected to be stronger than the first half, in line with the industry's continued recovery from the downturn," Chief Executive Peter Wennink said in a news release.
He added, "We see 2024 as a transition year with continued investments in both capacity ramp and technology, to be ready for the turn in the cycle."
Wall Street Responds To Report
Raymond James analyst Srini Pajjuri reiterated his strong buy rating on ASML stock and raised his price target to 1,100 from 1,000.
In a client note, he attributed the Q1 sales shortfall to "quarter-to-quarter lumpiness" and not a demand issue. ASML's 2024 sales will be buoyed by improving demand, the generative AI megatrend, and U.S. Chips Act subsidies.
Elsewhere, CFRA Research analyst Brooks Idlet maintained his buy rating on ASML stock but trimmed his price target to 1,013 from 1,033.
"We see elevated China demand (49% of net system sales in Q1 vs. 39% in the prior quarter) as a risk given continued geopolitical tensions/posturing," he said in a client note. "But we remain confident that other countries can fill in the gap in the event of further export controls."
ASML Stock Is On Four IBD Lists
Bernstein analyst Sara Russo kept her outperform rating on ASML stock with a price target of 1,052.
"While bookings and guidance were below expectations, we continue to believe in the setup for a stronger second-half 2024 and significant growth in 2025," she said in a client note. "ASML continues to build a solid backlog to underpin that expected growth."
ASML stock is on five IBD lists: Leaderboard, IBD 50, Big Cap 20, Global Leaders and Tech Leaders.
Heading into the earnings report, ASML stock had formed a flat base with a buy point of 1,056.34, according to IBD MarketSurge charts.
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