Overview
BofA Securities has maintained a Buy recommendation on ASML and left its price objective at EUR1,454 following the company's fourth-quarter financial report. The quarter featured a record net revenue figure and a sizable beat in bookings, while some profitability metrics fell a touch short of analyst consensus.
Quarterly results and bookings
ASML recorded fourth-quarter revenue of EUR9.7 billion, a 5% increase versus the same period a year earlier and a 29% rise compared with the prior quarter. That top-line number slightly exceeded the consensus estimate of EUR9.6 billion and included recognition of two High-NA systems. Bookings were reported at EUR13.2 billion, substantially ahead of the consensus booking expectation of EUR7.0 billion, representing an 89% upside against that benchmark.
Profitability and cash flow
The company posted a gross margin of 52.2% for the quarter, marginally above the 52.0% consensus. Operating profit was EUR3.4 billion, about 1% below the consensus forecast of EUR3.5 billion. Reported earnings per share were EUR7.4, 3% under the EUR7.6 consensus. Free cash flow stood at EUR11 billion, far exceeding the expectation of EUR3.8 billion.
Guidance and capital allocation
For the first quarter of 2026 ASML provided sales guidance between EUR8.2 billion and EUR8.9 billion, with the midpoint approximately 8% above consensus. Management expects gross margins in the range of 51% to 53% for that quarter. Full-year 2026 revenue guidance was set between EUR34 billion and EUR39 billion, a midpoint roughly 4% ahead of consensus. Alongside the outlook, ASML announced a new EUR12 billion share buyback program to be executed by the end of 2028. BofA Securities retained its positive stance on the company following these disclosures.
Valuation and market reaction
ASML is trading near its 52-week high and carries a price-to-earnings ratio of 53.26, indicating premium valuation levels relative to many peers. The combination of a strong bookings print, record quarter revenue, and exceptional free cash flow helped lift investor sentiment after the earnings release.
Full-year context
The EUR9.7 billion reported for the fourth quarter contributed to a 16% increase in full-year revenue for the company. The quarter's results and the guidance provided frame ASML's financial position heading into 2026 and accompany the sizable buyback program announced by management.
Key takeaways
- ASML posted record Q4 revenue of EUR9.7 billion and beat consensus on bookings and revenue.
- Operating profit and EPS were slightly below consensus, while free cash flow greatly exceeded expectations.
- Management issued 2026 guidance above consensus at the midpoint and launched a EUR12 billion buyback through 2028.
Sectors impacted
- Semiconductor equipment and capital equipment markets.
- Semiconductor manufacturing and related supply chains.
- Equity markets that price high-growth industrial technology companies.
Risks and uncertainties
- Premium valuation - the stock's P/E of 53.26 signals elevated expectations that could limit upside if operational metrics weaken; this affects equity market participants and valuation-sensitive investors.
- Profitability beats and misses - while gross margin was marginally above consensus, operating profit and EPS were slightly below, creating short-term performance uncertainty for earnings-sensitive market observers.
- Execution of guidance and capital allocation - the company provided 2026 revenue and margin ranges and announced a large buyback; market reaction will depend on execution against these plans, with implications for capital markets and investor confidence.
The figures in this report are drawn from ASML's disclosed fourth-quarter results and the guidance the company provided for 2026. BofA Securities' Buy stance and EUR1,454 price target were reiterated in light of these results.