Jefferies raises ASML, STMicro price targets on European semiconductor re-rating

Jefferies raised its ASML target to €1,560 from €1,260 and to €82 from €74 for STMicroelectronics, citing estimate upgrades and broad European semiconductor re-rating. For ASML, it projects Q2 revenue of €8.79B and 52% gross margin and expects FY 2026 revenue guidance to move from €36B–€40B to €38B–€42B, with focus on ~90 low-NA EUV system shipments in 2027. For STMicroelectronics, Jefferies forecasts Q2 revenue of $3.47B (35.3% adjusted gross margin) and expects first-half growth of ~20% half-on-half in 2H, driven by better data-center revenues; it maintained “buy” ratings while noting limited further re-rating potential in H2-26 on elevated multiples.

Analysis

This reads as a valuation-led, not purely fundamentals-led, move. The market has already paid up for European semi exposure, so the next leg depends on estimate revisions beating an increasingly rich multiple base; that makes equipment names like ASML, ASMIY, and VACNY more fragile than the headline upgrades suggest. If management does not validate a step-up in 2027 low-NA EUV shipments and FY26 guidance, these stocks can underperform even on decent print quality because the buy case is now anchored to perfection.

The cleaner earnings torque is still in analog and mixed-signal names such as STM, IFNNY, and MLXSF, where data center content and a better handset cycle can extend the revision runway into 2027. Apple’s longer iPhone cadence matters less for unit growth than for keeping the replacement cycle from deteriorating, which supports power-management, connectivity, and sensor content per device. That favors suppliers with broad socket exposure, but it also means the rally can be more durable in the second order names than in the marquee capex beneficiaries.

Contrarian view: consensus is treating the sector as one uniform AI/semis trade, but the dispersion is widening between companies with real earnings revision upside and those already at peak multiples. The asymmetric setup is a pair trade, not a broad-basket chase; if macro cools or data center orders normalize, multiples will compress faster than estimates fall. The key falsifiers are a weak ASML guide raise, a 2027 shipment number meaningfully below the implied ~90 systems, or any sign that 2H analog growth is being pulled forward rather than sustained.

Key Decisions for Investors

• Long STM / IFNNY, financed with a short ASML or ASMIY hedge for 3-6 months: own the names with still-rising earnings revisions while avoiding the most crowded multiple exposure; target 1.5-2.0x gross long-vs-short beta-adjusted payoff if valuation dispersion narrows.
• Sell short-dated upside in ASML only after the print if guidance is merely in-line: the stock is already pricing a strong 2027 shipment narrative, so near-term upside looks capped unless FY26 revenue guidance is raised beyond the current expectation band.
• Add to MLXSF on pullbacks ahead of the next earnings cycle: this is a cleaner analog beta trade than equipment, with a longer runway if handset and auto content recover; risk is a sharper reversal if industrial demand rolls over.
• Set an alert on ASML low-NA EUV commentary and FY26 revenue guidance; if the company does not validate a step-up toward the high end of market expectations, reduce exposure across the European equipment basket quickly.