ASM International Stock: Barclays Cuts Price Target but Maintains Rating

ASM International N.V shares (AMS: ASM)dipped 0.79% today, as the firm saw it's price target trimmed, albeit with a bullish tone.

Barclays analyst Simon Coles reduced the price target to €550 from €580, while reiterating an “Overweight” rating. With the current ASM price around 404€, the upside remains more than 35% from here, reflecting the optimistic outlook on the semiconductor equipment supplier.

The adjustment reflects anticipation of a reset in expectations surrounding the company's 2027 projections, primarily due to currency fluctuations, set to be addressed at ASM's Capital Markets Day on September 23.

The adjustment follows ASM's second-quarter 2025 results, which showed bookings of €702 million, a 10% decrease compared to the first quarter at constant currencies. This downturn stemmed from reduced bookings in the advanced logic/foundry segment.

However, ASM anticipates a rebound in this area, particularly with the adoption of gate-all-around (GAA) technology, expected during the third quarter. Gross margin remained strong at 51.8%, despite a slight decrease from 53.4% in the previous quarter, attributed to favorable product and customer mix, improved operational efficiency, and robust sales in China.

Operating profit increased approximately 40% year-over-year, driven by higher sales, improved gross margins, and effective cost management, while the company continued to invest in research and development.

ASM International previously raised its 2025 revenue target to €3.0-€3.6 billion during its 2023 Investor Day, an increase from the prior target of €2.8-€3.4 billion. The company also projected revenues between €4.0-€5.0 billion for 2027, representing a compound annual growth rate (CAGR) of 11%-16% from 2022 to 2027. Gross margins are expected to remain between 46%-50%, with operating margins of 26%-31% for 2023-2025, extending these targets through 2027 with an anticipated upward trend in operating margins in the later years.

Third-quarter 2024 saw ASM International report record revenue of €779 million, a 56% year-over-year increase at constant currencies. Spares and service sales rose by 45%, fueled by strong demand from China, while equipment revenue grew by 22%, primarily driven by ALD products and significant memory sales.

The gross margin improved to 49.4%, and the operating profit margin increased to 28.2%. Order intake reached €850 million, up 30% year-over-year. Despite these positive results, ASM anticipates a return to normal growth levels in the fourth quarter and expects research and development expenses to rise by 15%-20%. Fourth-quarter 2024 sales are expected to decrease by 7%-15% compared to the first half, with the 2025 revenue target revised to €3.2 billion to €3.6 billion.

While the lowered price target from Barclays introduces a more cautious outlook from the previous level, the overall picture suggests a resilient company with strong fundamentals and growth prospects. ASM shares trade 28.95% lower than where they began the year at 567€, with the revised PT mildly below that level.