Shares of ASML Holdings (ASML) fell more than 4% in European trading on Wednesday after the company reported worse-than-expected sales for the first quarter of fiscal 2024.
The chipmaker reported net sales of 5.29 billion euros, slightly below expectations of 5.39 billion euros.
Net profit amounted to 1.22 billion euros, exceeding the forecast of 1.07 billion euros.
Compared to the previous year, net sales decreased by 21.6% and net profit decreased significantly by 37.4%.
Notably, net orders for ASML equipment, a key indicator of future earnings, amounted to €3.61 billion in the first quarter, representing a 4% year-on-year decline and a significant quarter-on-quarter decline, significantly out of line consensus estimate of 4.63 billion euros.
Despite the quarterly setbacks, ASML reiterated its full-year forecasts, expecting total sales to remain at last year’s level of 27.6 billion euros. The company is also preparing for significant expansion in 2025.
“Our forecast for full 2024 remains unchanged, with the second half expected to be stronger than the first, consistent with the industry’s ongoing recovery from the downturn,” said Peter Wennink, CEO of ASML.
“We view 2024 as a transition year with continued investment in both capacity expansion and technology to ensure we are ready for the turn of the cycle.”
ASML indicated that given the current backlog, it needs to secure approximately €4 billion of orders for each of the next three quarters to achieve its revenue target of €35 billion for the year.
“We do not expect any changes to CY24E EPS for CSS and remain confident that ASML will exceed this €35 billion average in 25E. ASML will only need a BtoB of 0.5x to meet management’s midpoint,” Bank of America analysts commented.
“This should be achievable given minimum orders from Taiwan (TSMC) and the US (Intel and Micron). We note that ASML would only need around €5.5 billion of orders in each quarter in the second half to reach the upper limit of this guidance,” they added.
BofA reiterated its Buy rating and €1,101 target price on ASML.