A Guidance Hiccup Barely Registers With ASML

Semiconductor equipment stocks have come roaring back on strong logic/foundry orders and anticipation that memory orders will soon come back in force. That hasn’t left many bargains, but this is a momentum-driven sector now. To that end, ASML (ASML) has been quite strong since my last update, rising almost 30% and more or less keeping pace with an assortment of semi equipment names like Advanced Energy (AEIS), Applied Materials (AMAT), and VAT Group (OTCPK:VACNY), while Lam Research (NASDAQ:LRCX) has done even better over that time.

I’ve been pretty straightforward in the past that these momentum situations are not my preferred investment environment and that’s just how it often is with semiconductor equipment names – they sell-off too much in the downturns and shoot back too far when spending recovers. Be that as it may, ASML still has a lot going for it, including a monopoly in the nascent EUV lithography market and upside to over EUR 20 billion in revenue in five years. I will say that ASML’s valuation is reasonable today in the context of its peer group, but the entire group is trading at a premium to normal drivers like near-term margins and revenue growth.

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A Guidance Hiccup Barely Registers With ASML