<News Alert> 4Q23 results ahead but management maintained flat sales guidance in 2024
- ASML revenue increased 12.5% y-o-y in 4Q23, reaching EUR 7.2bn while EPS rose by 13.3% y-o-y to EUR 5.21, slight ahead of the market consensus.
- No change in management’s guidance for flat sales in FY24 due to uncertain end-market demand;expect stronger growth in 2025
- Maintain a positive view on ASML, supported by an ongoing global end-market demand recovery, and other drivers such as AI. No change in BUY call with TP of US$830.0.
Solid 4Q23 growth but dim guidance for FY24
Despite the overall sluggish semiconductor industry, ASML continued its sustainable growth in 4Q23. 4Q23 revenue increased by 12.5% y-o-y to EUR 7.2bn, slightly ahead of management’s guidance and also consensus estimate. The gross margin remained steady at 51.4% vs. 51.9% in 3Q23. The GAAP EPS of EUR5.21 marked an increase of 13.3% y-o-y, ahead of the market expectation.
Order intake of EUR9.2bn in 4Q23 was three times more than the previous quarters, mainly driven by the resurgence in demand of the memory end-customer. Management is forecasting 1Q24 revenue to fluctuate by -6.4% to 3.0% y-o-y, landing between US$5.0bn and US$5.5bn, ahead of the market expectation. For the full year, the management maintained a subdued outlook and expects a flat revenue as compared to 2023 due to market uncertainties, both on the macro front and the pace of recovery for the semiconductor industry. Gross margin is projected to range from 48% to 49%.However, there are positive signs surfacing, including the improvement in inventory levels in the end markets, higher utilization rate of tools and the strong order intake. Hence, the group expects significant growth for 2025, with gross margin ranging between 54% and 56%.
Paving the way for stronger growth in 2025.
Despite short-term uncertainties in end-market demand, we maintain our positive view on ASML’s long-term growth, underpinned by the ongoing global end-market demand recovery from consumer electronics especially in smartphone and XR devices. Other drivers in place include the driving force of AI. We maintain BUY with TP of US$830.0 based on its monopoly position with the leading edge in lithography.