To The Moon

$ASML Holding NV(ASML)$ is scheduled to release its Q2 earnings on Wednesday (17 July) before market open. Their latest guidance is conservative which indicate a -13.8% YoY decline in revenue and continued margin pressure.

Last month rally for ASML was due to market feeling optimistic from TSMC's high-NA EUV deal, which can improve ASML growth outlook in FY 2025. ASML management has again reminded that the export controls on China will affect their China’s sales in FY 2024 about 10% to 15%, this is a structural geopolitical risk that we might need to watch out for ASML.

With an expected 56.1% YoY of its EPS growth in FY 2025, the stock is still trading at 32.x of P/E FY2025, indicating that most of the next year's growth tailwind has been priced in. ASML forecasts flat YoY revenue for FY 2024, which creates downward pressure on margins due to a weak top-line growth.

The consensus EPS forecast for Q2 2024 is at $4.03 which is more than 10 percent lower than same period last year ($5.52).

More Than 40% Returns For Investors On ASML Holding NV (ASML)

Regardless of the risk and challenges that ASML pose, it has given investors more than 40% returns year-to-date, and I have feeling that these tailwinds might be priced in ASML stock price.

Considering the rally on the back of TSMC's high-NA EUV deal, ASML did trade lower yesterday (15 July), but it might be temporary.

I would think that ASML should still be able to benefit from the AI boost.

Analyst Stock Price Forecast

Based on 5 Wall Street analysts offering 12 month price targets for ASML Holding in the last 3 months. The average price target is $1,119.00 with a high forecast of $1,185.00 and a low forecast of $1,000.00.

The average price target represents a 5.21% change from the last price of $1,063.63.

There might not be too much expectation of a price move for ASML before its earnings.

Hedge Fund Selling and Ownership

The ownership structure of ASML Holding (ASML) stock is a mix of institutional, retail and individual investors. Approximately 8.90% of the company’s stock is owned by Institutional Investors, 0.00% is owned by Insiders and 91.10% is owned by Public Companies and Individual Investors.

This is one of the companies that does not have any insiders holding its shares, so we need to watch how the institutional investors and also pubic investors are trading.

There are some sales of the stocks in the first quarter, but there is none in the second quarter, so we can see that the sentiment and confidence should still be strong for ASML, considering the AI boost demand.

And the institutional investors are holding quite a spread out percentage, and this might be good so that anyone movement in sales of the shares would have much impact on ASML.

Technical Indicator - MACD and KDJ - ASML Holding NV (ASML)

From the technical, we are seeing that ASML is actually consolidating on the MACD, and there is sign that a downside is coming, and for the KDJ, it has started to show a downside movement as well.

So I would be expecting that ASML might be losing market share as TSMC could be the one leading, but ASML other market segment need to do well in order to catch up.

Earning Price Move Suggest Downside Post Earnings

From the earnings price move that I used, we are looking at a downside move after ASML earnings, there is not much strong signal that ASML could stage an upward movement.

Unless there is a news of more AI demand for chips, ASML might not be seeing any upside soon.

Summary

ASML might not enjoy the similar demand from AI boost as $Taiwan Semiconductor Manufacturing(TSM)$ . Unless there is a demand from some of the data centre providers in Europe, because ASML is mostly serving european side, we might see ASML trading downside before its earnings.

Appreciate if you could share your thoughts in the comment section whether you think ASML would be trading lower before its earnings.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.