Breaking Down ASM International (ASMIY/ASMXF)
Enhanced Buy Recommendation for ASM International Due to Improved Growth Prospects and Robust Strength
Following my analysis on ASM International (ASMIY/ASMXF) in November 2024, where I recommended a buy rating based on the belief that the company's underlying demand strength remained strong and it would meet its guidance, the situation has taken a more nuanced turn.
Here's a lowdown on its current status, focusing on recent analyst actions, financial performance, and market context.
Analyst Action
In a shift of sentiment, HSBC upgraded ASM International from Hold to Buy on May 2, 2025. However, they reduced their price target from €640 to €560, indicating a slightly lowered earnings expectation. The revised target, nonetheless, reiterates the stock's potential undervaluation, considering its long-term growth in advanced semiconductor technologies like gate-all-around (GAA) nodes.
Financial Performance
- The company's Q1 2025 results showed a significant leap with revenue reaching €839.2 million, up 26% year-over-year (constant currency). New orders also rose 14% YoY to €834 million.
- Analysts forecast a 2025 revenue of €3.42 billion, representing a 9.3% annual increase. However, growth is expected to slow compared to historical trends.
- Trading at €425.30 per share (May 1 price), ASM’s FY26/27 EV/EBIT multiples of 18.6x/15.7x are now below its 5-year average of 25.1x.
Market Context
The stock has seen a 24% YTD decline (as of May 2025) and has dropped over 40% from its July 2024 peak, underperforming peers like ASML and the SOX index. Despite this downturn, HSBC anticipates order recovery in late 2025 due to leading-edge node expansions, suggesting a shift in market sentiment.
Takeaway
Despite short-term volatility due to earnings uncertainty, ASM’s positioning in advanced semiconductor manufacturing and its revised valuation make it an attractive buy, according to HSBC's latest assessment. While the road ahead may be bumpy, the potential for growth in GAA nodes offers a compelling long-term outlook for investors.
- HSBC recently upgraded their rating on ASM International from Hold to Buy, indicating a positive outlook, even though they reduced their price target slightly.
- In Q1 2025, ASM International reported a significant revenue increase of 26% year-over-year, with new orders also rising by 14%.
- Analysts anticipate a 9.3% annual revenue growth for ASM International in 2025, but expect growth to slow compared to historical trends.
- Despite a 24% year-to-date decline and a 40% drop from its peak, HSBC anticipates order recovery for ASM International in late 2025, making it an attractive investment option for those willing to navigate potential short-term volatility.
