ASML plunges despite upbeat quarterly results

12:37 PM January 25, 2023

ASML (ASML.NL) shares fell nearly 2.0% on Wednesday despite the fact that Europe's largest technology company posted better than expected Q4 results and issued an upbeat financial outlook.

  • Q4 net profit €1.82 bln above analysts’ estimates of €1.70 billion)

  • Revenue rose more than 29% to €6.43 bln and topped market estimates of €6.38 billion euros

  • On the flip side, full-year net income plunged over 4% to 5.6 billion euros.

  • Netherlands-based company said order backlog jumped to a record €40 bln ($43.62 bln) at the end of the year.

  • ASML supplies the ‘lithography’ machines that are essential for manufacturing semiconductors for industry giants like Taiwan Semiconductor or Intel and expects 25% sales increase in 2023.

  • “When we look at the state of the industry today, we are not insulated from ... recessionary fears or high inflation or high interest rates, that’s also clear. And then we see the effect of this in the business of our customers,” ASML CEO Peter Wennink told CNBC.

  • The Dutch company expects Q1 2023 net sales in the region between €6.1 bln to €6.5 bln and a gross margin between 49% and 50%.

  • Wennink also said China accounted for around 15% of sales in 2022 and will be at a “similar” amount this year, despite U.S. chip export restrictions.

  • On the other hand, Wennink pointed out that inventories of chips related to consumer products are increasing due to low demand, however AMSL's customers believe this will be “short-lived” and are therefore not canceling orders.

ASML (ASML.NL) stock pulled back sharply as buyers failed to break above key resistance at  €626.00 which coincides with 61.85 Fibonacci retracement of the downward wave launched in November 2021 and upper limit of the triangle formation. Nearest support to watch can be found at €579.50 and its negation could provide more fuel for market bears. Source: xStation5

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