ASML stock, IBD stock of the day, gains on gains, guidance

Semiconductor equipment manufacturer ASML (ASML) is the IBD stock of the day after the company easily exceeded Wall Street targets for the first quarter and guided above. ASML shares jumped on the news.

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The Dutch company earned the equivalent of $ 3.87 a share in sales of $ 5.26 billion in the March quarter. Wall Street predicted ASML earnings of $ 3.14 per share on sales of $ 4.86 billion, according to S&P Global Market Intelligence. ASML reports financial results in euros. Over the previous year, ASML earned the equivalent of $ 1.02 per share from $ 2.66 billion in sales.

ASML and other semiconductor equipment suppliers are receiving sales momentum from chip manufacturers. The industry is investing in new capabilities to meet growing demand.

The company’s gross profit margin in the first quarter was 53.9%, well above its 50.5% guidance.

Chips are missing a tail wind for ASML stock

“Compared to three months ago, we see a significant increase in demand across all market segments and in our product portfolio,” CEO Peter Wennink said on Wednesday. “Building digital infrastructure with secular growth factors such as 5G, AI and high-performance computing solutions fuels the demand for advanced and mature nodes in logic (chips) as well as memory.”

ASML now expects revenue growth of about 30% in 2021, Wennink said. The company previously led the “double-digit” growth for that year.

Key customers as well Taiwan Semiconductor Manufacturing (TSM), Samsung and Intel (INTC) have stepped up their capital investment plans in recent weeks in response to increased chip demand and shortages.

The Dutch-based ASML manufactures advanced lithography equipment for engraving small semiconductor circuits.

CFRA Research analyst Jun Zhang Tan on Wednesday updated the ASML stock to buy from the hold. It also raised its 12-month price target for its US shares to 745 from 540.

“Although it has been widely anticipated that the global semiconductor shortfall will bring ASML benefits, the benefit force is much stronger than market expectations,” Tan said in a note to customers.

ASML’s reservations show “the first signs of a command tsunami,” said Robert Maire, chairman of semiconductor advisors, in a note to clients.

ASML stock is on the IBD watch lists

In today’s stock market, ASML shares rose 6.3% to close at 655.49.

As of April 5, ASML shares recorded a record level of 653. ASML shares are on the IBD 50 list of high-performance growth stocks, as well as on the list of IBD global leaders.

In a bullish sign, ASML shares found support at its exponential moving average 21 days before its earnings report. It is in a period of consolidation, but has not yet formed an adequate basis, in accordance with the IBD trading guidelines.

ASML stock equals first place in the IBD electronic semiconductor equipment industry group, according to IBD Stock Checkup. Share the best IBD Composite Rating 99 with six other chip equipment stocks, including Applied materials (AMAT) and Lam Research (LRCX).

The semiconductor equipment group ranks 14th out of 197 industrial groups pursued by IBD. It helps you choose highly rated stocks from the top groups in the industry in a confirmed upward trend of the stock market. In general, this increases your chances of making profits from growing stocks.

The ASML stock has an IBD relative strength rating of 83 out of 99. This means that it has exceeded 83% of the stocks in the last 12 months.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more articles on consumer technology, software and semiconductor stocks.

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