ASM International Stock Target Raised at BofA: "Revenue Guide Might Be Too Low"
Bank of America (BofA) has increased their price target for ASM International NV to €860 per share from the previous €758. The analysts at BofA have maintained their Buy rating on the stock, describing the company as a "critical AI enabler."
Deep Dive into ASM’s Future
BofA's analysis suggests that ASM International's revenue guide for CY25/CY27E might be underestimating its potential. They believe that ASM's leadership in ALD and Epi tools will help the company grow faster than the WFE market by about 8 percentage points per year for the next four years.
Revenue and Market Predictions
BofA predicts a possible revenue and EBIT margin increase:
- CY27E revenues could reach €5.1 billion compared to the company's current guide of €4.0-5.0 billion.
- EBIT margins might be 33% instead of the 26-31% currently forecasted.
According to BofA, these higher estimates are based on three main factors:
- Higher WFE estimates.
- Larger Total Addressable Market (TAM) for ASM's core segments.
- Market share gains.
Expected Earnings
The bank expects a CAGR (Compound Annual Growth Rate) for EPS (Earnings Per Share) of 27% from CY23-27E, with EPS for CY27E projected to be €31 (which is 19% above consensus). In a more optimistic scenario, the EPS could be as high as €33.
Strong Financials and Growth Prospects
BofA also emphasized ASM International's:
- Long growth duration.
- Unique market positioning.
- Strong free cash flow (FCF) generation.
They estimate that the company will generate around €3.5 billion of FCF through 2027. This will enable ASM to return more cash to its shareholders, further strengthening investor confidence.
By focusing on these elements, BofA remains confident in ASM International's ability to outperform market expectations and deliver robust financial returns.
