Jefferies downgrades ASML stock to hold on 2026 revenue concerns

Jefferies downgraded ASML Holding NV from buy to hold, citing concerns over its 2026 outlook, projecting revenue and EPS declines significantly below consensus, and anticipating semiconductor capital equipment industry deterioration. Despite the downgrade, Jefferies raised its price target to EUR690, noting limited downside risk from recent derating and long-term attractiveness, particularly with TSMC's 2028 high-NA EUV adoption. This action follows ASML's mixed Q1 bookings and reaffirmed 2025 guidance, amidst varied analyst perspectives ranging from Strong Buy to Market Perform, highlighting diverse views on the company's near-term trajectory and long-term market positioning.

Analysis

Jefferies has downgraded ASML Holding NV to 'hold' from 'buy', citing significant concerns over the company's 2026 outlook. The firm's forecast anticipates a 2% year-over-year revenue decline to EUR32.1 billion and a 6% drop in EPS, which are notably 9% and 17% below consensus estimates, respectively. This cautious stance is reinforced by the expectation of deteriorating news flow for the semiconductor capital equipment industry in the latter half of this year and a valuation that, at a P/E ratio of 31.43x, appears high relative to near-term earnings growth potential. This view is further compounded by ASML's recent report of a sharp decline in first-quarter bookings to €3.9 billion from €7.1 billion in the prior quarter. Despite these headwinds, Jefferies raised its price target to EUR690 and noted limited downside risk due to the stock's recent derating, maintaining that ASML remains attractive for investors with horizons beyond one year, supported by the long-term adoption of high-NA EUV by TSMC in 2028. The market reflects this uncertainty, with a wide dispersion of analyst ratings ranging from Strong Buy (Raymond James) to Equalweight (Barclays), highlighting conflicting views on near-term challenges like geopolitical tensions and higher operating expenses versus long-term tailwinds such as AI-driven demand.

Key Decisions for Investors

• Investors should weigh the near-term cyclical headwinds, including a significant drop in bookings and anticipated industry weakness, against the company's reaffirmed 2025 revenue guidance and strong long-term structural drivers.
• Given the stock's high P/E ratio of 31.43x and Jefferies' forecast of a 2026 earnings decline, positions should be evaluated based on an investor's specific time horizon, as long-term prospects centered on technology leadership appear more favorable than the near-term outlook.
• The wide divergence in analyst price targets and ratings, from €650 to $850, indicates significant market uncertainty, suggesting that investors should monitor semiconductor capital equipment orders and foundry-related news closely for catalysts that could resolve this conflicting sentiment.