ASML Holding NV (NASDAQ: ASML) stock delivers > 50% performance a month

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ASML Holding NV (NASDAQ: ASML) stock rose over 6.8% last week (April 13th– 17th, 2020), leading to a total rally of more than 51% in the last four weeks (Source: Finviz.com).

The company reported the net profit of 391 million euros ($429 million), up from 355 million euros in the same period a year ago, but behind analysts’ consensus estimates of 534 million euros, as polled by Refinitiv. The company had reported the adjusted revenue of 2.44 billion euros in the first quarter of FY 20, which is in line with the company’s guidance of 2.4-2.5 billion euros given in March, though had cut a previous estimate of range 3.1-3.3 billion euros. The company was also expecting for the first quarter the gross margin to be between 45% and 46%, and that impacted revenue was anticipated to shift to subsequent quarters in 2020. The company posted the gross margin of 45.1%, which is at the lower end of the updated guidance due to delayed revenue from field upgrades. The company had shipped four EUV systems in the quarter, but is only able to recognize revenue for two systems. The company’s Q1 net bookings were strong and came in at €3.1 billion, that includes €1.5 billion of EUV systems (11), which shows continued strong demand for EUV.

Further, the company could not issue the full year guidance, on the back of difficulty in projecting the current demand and the current shipment plans, that should really enable the company to achieve the target. In January, the company had forecasted the growth of sales and profits to be of at least 10 percent in 2020.

Installed Base Management sales for the quarter came in at EUR857 million, which is about EUR100 million lower than guided due to lack of access to machine time as well as a delay in acceptance of upgrades. However, the company expects these upgrades to translate to revenue in Q2.

Moreover, in the company’s own facilities, the company has implemented restricted access to the manufacturing facilities worldwide.  With regard to the supply chain, some of the company’s suppliers have experienced temporary closures that have resulted from governmental lock down and shelter in place orders. At this stage, the company has to either work around these temporary disruptions or till the closure has been resolved.

Additionally, the company ended the quarter with cash, cash equivalents and short-term investments at a level of EUR4.1 billion.

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