Investing.com -- After a roadshow with ASML’s CEO and chief financial officer, UBS analysts returned more confident that investor concerns about the Dutch chipmaking equipment maker’s production capacity are overstated.

The bank reiterated a Buy rating on the stock and its price target of €1,600.

ASML management reiterated the potential extreme ultraviolet (EUV) capacity of more than 80 systems in 2027, with output remaining closely tied to demand and discipline maintained on overbuilding.

"In our view, investors continue to underestimate ASML’s manufacturing flexibility and ongoing productivity gains across its tool portfolio," analysts led by Francois-Xavier Bouvignies said in a note.

Moreover, the introduction of a new EUV model F in 2027 should provide a further capacity uplift without requiring proportional increases in tool output, they added.

Commenting on China, analysts noted near-term softness in the country, saying that lithography demand has recovered more slowly than expected due to fab readiness constraints and lead time mismatches.

UBS models ASML’s China revenues falling 10% in 2026 before rebounding 9% in 2027, and argues that strength in non-China advanced logic and memory more than offsets the shortfall.

Analysts also said that record second-half 2025 lithography spending is more likely to benefit deposition and etch equipment in 2026 rather than provide immediate lithography upside, implying a stronger lithography recovery in 2027.

On High NA — ASML’s next-generation EUV technology — UBS pointed to recent feedback from the SPIE conference as supportive of continued adoption confidence. The bank cited 20-40% cost savings versus alternative patterning approaches, tool availability expected to exceed 90% in the second half of 2026, and meaningful process simplification as factors supporting initial High NA insertion in the 2028-2029 timeframe.

ASML’s first-quarter gross margin came in at 53%, with full-year guidance reiterated at 51-53%. Analysts see conservatism in that range given limited visibility on upgrades, and forecast a full-year gross margin of 53.8%, toward the upper end of guidance.