MW Looking through to 2027, UBS upgrades 'quality compounder' ASML to buy

By Jules Rimmer

ASML's 2.5% decline so far in 2025 compares unfavorably to the 12% return for the Euro Stoxx 50 benchmark index.

Among the largest stocks in Europe, ASML has underperformed its benchmark Euro Stoxx 50 index by around 15% in 2025 so far. That's far enough for UBS which has upgraded the stock to buy on Friday, while bumping up its target price from EUR660 to EUR750.

The (NL:ASML) $(ASML)$ shares are presently hovering around the EUR650 mark, so offering around 15% to investors prepared to look through what ASML has already telegraphed will be a difficult 2026 into what promises to be a more rewarding period from 2027 through to 2030.

The UBS note published Friday and titled "The Light Returns" focuses on issues surrounding lithography intensity, the cost associated with copying patterns onto silicon wafers used in the manufacture of semiconductors - and "High NA," the next-generation chip manufacturing technology. UBS sees growth drivers improving in both parts of the business in the next several years.

UBS assumes that litho intensity will pick up again in 2027, most likely boosted by a production ramp-up at TSMC $(TSM)$ in their A14 logic process technology. They wager the litho intensity cycle is well-understood by the market and uncertainty is fading.

New work on High NA reassures the UBS analyst team, led by Francois-Xavier Bouvignies, in the long-term growth story as production is expected to be signalled in 2026/2027 before coming onstream in 2028/2029. The meaningful adoption that's predicted in the two years could be responsible for 30% of the group revenue growth in 2027/2028.

Confidence then in the High NA adoption rates persuades Bouvignies to increase earnings per share growth by 4% to 7% beyond 2027 and boost the target price by some 13%. Looking at valuation multiples ASML trades on 27 times its 2027 forecast earnings and this compares favorably with a ten-year average of 28 times.

UBS emphasizes that ASML has "long lead times for its products and a high-level of integration into customers' long-term roadmaps" and this should make investors more comfortable with estimates of a 20% compound annual growth rate in earnings per share in 2026 through 2030 and so looking beyond the share's present underperformance.

The upgrade from UBS brings its target price roughly into line with the rest of the street where the mean target price is around EUR750. Analyst sentiment towards ASML belies its dismal performance year-to-date with only one sell recommendation among the three dozen or so published on FactSet. The Nasdaq 100 QQQ component was up 1.5% in Dutch trading on Friday.

-Jules Rimmer

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September 05, 2025 07:14 ET (11:14 GMT)

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