Key Morningstar Metrics for ASM International
- Fair Value Estimate: EUR 635
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: Wide
- Morningstar Uncertainty Rating: High
What We Thought of ASM International’s Earnings
ASM International’s ASM second-quarter results were below expectations, with weaker-than-expected orders of EUR 703 million, down 7% and 16% on a year-on-year and sequential basis, respectively. Investors were hoping for stronger orders and are now figuring out if 2026 revenue expectations are too high.
Why it matters: Management expects third-quarter orders to be higher than this quarter, but still with a book/bill ratio lower than 1, so we estimate orders could come in around EUR 750 million. Orders were lower this quarter due to timing at logic and foundry customers.
- Memory orders are also normalizing after a strong 2024, and ASM expects memory to contribute less than 20% of equipment revenue compared with 25% last year. The second quarter of 2024 also had a high base with 55% growth year on year, which has an impact on comparability.
- Management confirmed it expects to “at least maintain” its ALD and epitaxy market share in logic, while they expect to gain share in memory as intensity increases. No changes here, but this reinforces ASM’s long-term thesis once again.
The bottom line: We are maintaining our EUR 635 fair value estimate for wide-moat ASM International. Shares offer 40% upside after the 10% decline on July 23.
- Assuming a lead time of six months, ASM needs an average of EUR 770 million in quarterly orders in the next four quarters to reach our estimate of EUR 3.8 billion in 2026 sales. The EUR 780 million bar has been achieved several times before.
- In 2027, we model EUR 4.4 billion in sales compared with midterm guidance of EUR 4 billion to EUR 5 billion. We model low-double-digit growth from then onward, with gross margins expanding above 52%.
