ASML's (ASML.US) significant stock decline following its Q2 earnings release presents a strategic buying opportunity, according to Evercore ISI. The firm maintains an "outperform" rating on ASML's Amsterdam-listed shares with an €803 price target, representing approximately 14% upside from July 15th closing levels.
Evercore ISI analyst Mark Lipacis emphasized that ASML's valuation compression - with its price-to-earnings ratio contracting 35%-40% over the past nine months - already reflects expectations of near-term weakness. "We believe it's time to buy the dip," Lipacis stated, noting that management's projection of potentially declining gross margins in the second half stems from revenue recognition timing for high-NA technology systems and reduced upgrades in service revenue mix.
While ASML remains on track to achieve its 2025 revenue target (midpoint of €32.5 billion), Lipacis highlighted greater uncertainty regarding 2026 prospects. Management specifically cautioned that intensified macroeconomic and geopolitical uncertainties could challenge growth expectations for that year.
Counterbalancing these concerns, Lipacis pointed to ASML's observation of "strong artificial intelligence demand year-to-date," characterizing it as a crucial growth driver across both foundry logic and DRAM markets. The Dutch semiconductor equipment maker reported robust Q2 results, with total revenue reaching €7.7 billion and net profit at €2.3 billion - both hitting the upper end of guidance.
Investors reacted sharply to the cautious outlook, sending ASML shares tumbling 8.3% during Wednesday's US trading session.
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