ASML stock upgraded to Buy by UBS with €750 price target

UBS has maintained its Buy rating on ASML Holding NV, raising its price target to €750, citing the company's potential return as a 'quality compounder' with a projected 20% EPS CAGR from 2026-2030, supported by strong fundamentals and anticipated inflection points like TSMC's A14 node and High NA technology adoption. This positive outlook contrasts with recent mixed analyst sentiment, as some firms like Deutsche Bank, Erste Group, and Freedom Broker have adjusted targets or downgraded ASML due to concerns over EUV shipments, 2026 growth prospects, and macro uncertainties, even as ASML management reaffirmed its fiscal year 2025 targets.

Analysis

Analyst sentiment on ASML Holding NV is currently divergent, creating a distinct long-term versus near-term narrative. UBS presents a strong bull case, raising its price target to €750 and framing ASML as a 'quality compounder' poised for a rebound after a 20% stock underperformance. This optimism is underpinned by a projected 20% earnings per share CAGR from 2026 to 2030, driven by key technological inflection points such as the production ramp of TSMC's A14 node and the adoption of High NA technology, which is forecast to contribute approximately 30% of revenue growth in 2027-2028. This long-term view is supported by robust fundamentals, including 26.4% revenue growth in the last twelve months, a 52.5% gross profit margin, and a 19-year history of dividend payments. However, this contrasts with a more cautious near-term outlook from other firms. Deutsche Bank, BofA Securities, Erste Group, and Freedom Broker have either lowered price targets or issued downgrades to 'Hold', citing concerns over EUV shipment volumes, macro and geopolitical uncertainties, and weaker revenue growth prospects for 2026. ASML's own management has contributed to this mixed picture by narrowing its FY25 sales range and providing Q3 guidance that fell slightly short of expectations, even while reaffirming its full-year 2025 growth target of 15%.

Key Decisions for Investors

• Investors with a long-term horizon could interpret the current mixed analyst sentiment and recent stock underperformance as a strategic entry point, focusing on the projected 20% EPS growth from 2026 and the company's strong technological moat.
• It is prudent to monitor near-term catalysts that could resolve current uncertainties, specifically company commentary on High NA adoption during quarterly results, clarity on EUV exposures at industry events, and new customer announcements from Intel and Samsung.
• Given the cautious guidance and recent downgrades, investors should weigh the significant long-term growth potential from new product cycles against the immediate risks of revised EUV shipment forecasts and potential softness in 2026 revenue growth.
• For existing positions, the company's solid financial health, 27x P/E ratio, and reaffirmed 2025 growth targets may justify a hold, pending further clarity on the 2026 outlook and the pace of High NA adoption.