ASML: Why It's Too Early To Buy (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Service revenue streams on the installed base seem to be ASML's incremental growth driver, whereas system sales have been falling, casting doubt on demand health.
• More particularly, unit sales volume declines are concerning and reflective of sluggish demand. An increased mix of used unit sales also indicates increasing price-sensitivity among customers.
• TTM net bookings have also started to tick down, leading to another signal of longer-term demand risks. Unfortunately, management intends to stop disclosing this metric in FY25.
• On the other hand, valuations are at a lower than usual premium vs semiconductor equipment peers. And the relative technicals show a balanced fight between the bulls and the bears.
• Gross margins are a key monitorable; Q1 FY25 guidance beat expectations, but H2 FY25 outlook is flagged to be weaker.

Read the full article here.