“ASML price rises due to collision with its moving average”

ASML Today it is one of the largest European companies, although many investors overlook it, because it does not have the same press as other giants in the semiconductor sector, or simply because of a certain complexity of the business.

The Dutch company ASML is engaged in the production of lithographic machines, which are necessary for the production of chips. This technology is one of the most relevant in the modern world, because it allows you to draw perfect patterns on silicon wafers. These semiconductors are found in most things we use today, from cars to electronic devices and even healthcare.

The semiconductor sector is in constant search for efficiency, so the more advanced the technology, the better. In this, ASML is the king of the sector because it has a monopoly on EUV machines, which are state-of-the-art and enable smaller chips than older technologies such as DUV. EUV took 20 years to develop, Therefore, it is difficult for a competitor to appear in the short term.

Therefore, The company was able to increase sales by 22.1% per year from 2016 to 2023, followed by a profit that allowed EPS to grow by 28% annually as of the above date.

If we look at the long-term perspective, we can estimate an EBIT of around 22,860 million euros until 2030, which is in line with the company’s estimates. If we apply an EV/EBIT multiple of 20 times to this, we get a target price of around €1,167 per share, giving it 37% upside potential by 2030.

ASML’s share price has fallen in recent weeks and it’s not a good year for it. However, within the bearish channel we see the exhaustion of this trend because The ADX fell sharply below the trend level. This could lead to a sideways trend, but a collision with its moving average could push the price of ASML higher in the coming weeks. That could top €900 per share, giving it potential upside of more than 7%.

*** Javier Cabrera is an analyst at XTB.