Cowen Trims PT on ASML (ASML) to EUR 95; Doesn't Dislike, But Would Rather Own Lam Research (LRCX)

Cowen and Company trims its price target on Outperform-rated ASML Holdings (Nasdaq: ASML) from €105 down to €95 following Q3 results issued Tuesday night.

Analyst Tim Arcuri said the new price target comes on a slightly less optimistic mult on the same ~ €7/share sustained peak estimated EPS for ASML (far below its own model of €9-10/share). EUV remains the world's greatest science project, but ASML will ultimately achieve some 7nm insertion. Overall, would still rather own LRCX but do not dislike ASML.

Arcuri elaborates, On customer mix, memory orders were up €~100MM Q/Q consistent w/ASML guidance while foundry and logic were both down, the latter due largely to tough compares against the INTC EUV order last Q. While fundamental progress continues to be made on EUV, the company yet again downticked on EUV shipments, now expecting to ship only 4 tools in '15 versus prior 7. Per the company, this is due to its inability to hit the 10nm window (this has been clear for some time) and customers choosing to instead allocate precious dollars to immersion tools to ramp baseline 10nm production in 2H:16 adding more flux and uncertainty to EUV shipments.

For 2016, revenue recognition remains very uncertain, but as far as we can tell, a reasonable baseline for EUV revenue is ~€300MM or maybe a little more. Guidance was disappointing near-term - memory is down but relatively strong with foundry downticking a little on 28nm (lower TSMC utilization) and less capacity ultimately require for 14/16nm. Relative to 10nm, despite some confusion, ASML's view on timing has not changed and, if anything, it feels more comfortable with 10nm ramp starting in CQ2:16 for both INTC and TSMC adding a baseline amount of capacity.

For an analyst ratings summary and ratings history on ASML click here. For more ratings news on ASML click here.

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