ASML inventory, IBD inventory of the day, increase in earnings, guidance

Semiconductor equipment manufacturer ASML (ASML) is the IBD Stock Of The Day after the company easily beat Wall Street’s targets for the first quarter and led higher. ASML shares came on the news.

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In the quarter of March, the Dutch company earned the equivalent of $ 3.87 per share on sales of $ 5.26 billion. According to S&P Global Market Intelligence, Wall Street forecast $ 3.14 per share ASML earnings on sales of $ 4.86 billion. ASML reports financial results in euros. In the previous year, ASML earned the equivalent of $ 1.02 per share on sales of $ 2.66 billion.

ASML and other semiconductor equipment suppliers are getting boosted sales from chipmakers. The industry is investing in new capacity to meet the rising demand.

The company’s gross profit margin was 53.9% in the first quarter, which was significantly higher than the forecast for 50.5%.

Disk shortages a tailwind for ASML inventory

“Compared to three months ago, we see a significant increase in demand in all market segments and our product portfolio,” CEO Peter Wennink said in a news release on Wednesday. “Building the digital infrastructure with secular growth operators such as 5G, AI and high-performance computing solutions is fueling the demand for advanced and mature nodes in logic (chips) as well as memory.”

ASML now expects revenue growth of around 30% in 2021, Wennink said. The company has previously led to double-digit growth for the year.

Important customers such as Taiwan Semiconductor Manufacturing (TSM), Samsung and Intel (INTC) has increased their capital investment plans over the past few weeks due to the increased demand for chips and shortages.

ASML in the Netherlands makes advanced lithography equipment to etch small circuits on semiconductors.

CFRA research analyst Jun Zhang Tan on Wednesday upgraded ASML shares to buy out of ownership. It also raised its 12-month price target on its US shares from 540 to 745.

“While the global shortage of semiconductors is widely expected to benefit ASML, its benefit is far stronger than the market expected,” Tan said in a comment to customers.

ASML’s discussions show the ‘early signs of a tsunami in order’, said Robert Maire, president of Semiconductor Advisors, in his note to clients.

ASML inventory is on IBD watchlist

On the stock market, the ASML stock jumped 6.3% today to 655.49.

On April 5, ASML shares reached a record high of 653. ASML shares are on the IBD 50 list of the best performing growth stocks, as well as IBD’s Global Leaders list.

In a bullish sign, ASML shares gained support on the 21-day exponential moving average line ahead of its earnings report. This is in a consolidation period, but according to IBD trading guidelines should not yet form a proper base.

According to IBD Stock Checkup, ASML inventory ranks first in IBD’s electronics semiconductor equipment group. It has a best possible IBD composition of 99 with six other stocks with a chip gear, including Applied materials (AMAT) and Lamb research (LRCX).

The semiconductor equipment group is number 14 of the 197 industry groups that IBD follows. It helps to choose stocks that are highly rated from leading industry groups in a confirmed uptrend. This usually increases your chances of making a profit in growth stocks.

ASML shares have an IBD Relative Strength Rating of 83 out of 99. This means that they have outperformed 83% of the shares over the past 12 months.

Follow Patrick Seitz on Twitter @IBD_PSeitz for more stories on consumer technology, software and semiconductor supplies.

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