ASML slips on Stifel downgrade, says outperformance 'set to pause' in 2024
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ASML (NASDAQ:ASML) shares slipped fractionally in pre-market trading on Tuesday as Stifel downgraded the semiconductor equipment company, noting the industry outperformance is "set to pause" in 2024.
Analyst Juergen Wagner lowered his rating on ASML (ASML) to hold from buy, noting that the 25% revenue growth it's likely to generate this year should slow to 5.5% in 2024.
"We believe the current demand shift from leading-edge to mature semiconductor production technology CAPEX at leading foundries should imply [extreme ultraviolet lithography] demand pushouts, as evidenced by a weak order intake for EUV tools in Q1 (down [more than] 50% Q/ Q)," Wagner wrote in an investor note. "This should negatively impact growth expectations for 2024 (and 2025), according to our analysis." 
In addition to the downgrade, Wagner lowered his per-share price target to â¬650, down from â¬750.
Wagner added that the enormity of the downturn in the memory market for this year is likely to be more impactful on EUV tools and that other semiconductor equipment companies, such as Applied Materials (AMAT) are better positioned given their competencies. 
Applied Materials (AMAT) shares were little changed in pre-market trading.
Last week, ASML (ASML) reported first-quarter results that topped expectations. The company earned â¬4.96 per share on â¬6.7B in revenue, topping estimates of â¬4.16 and â¬6.34B. The company said its gross margin during the period was 50.6%.
Though the results beat expectations, ASML (ASML) said its sales in China - its third largest market - fell during the period. However, the company expects China sales to rebound through the remainder of the year even as geopolitical tensions between China and the U.S. over China's semiconductor industry wages on.
Looking ahead, ASML (ASML) expects second-quarter sales to be between â¬6.5 billion and â¬7.0 billion and a gross margin between 50% and 51%. For the full-year, it expects to grow revenue 25% year-over-year.
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