Morgan Stanley raises ASM International stock to Overweight By Investing.com

On Wednesday, ASM International NV (AS:) (ASM:NA) received an upgrade in its stock rating by Morgan Stanley, shifting from Equalweight to Overweight. Alongside the upgrade, the firm also significantly increased the price target for the company’s shares to €800, up from the previous target of €525. This adjustment reflects Morgan Stanley’s optimistic outlook on the company’s growth prospects, particularly in the field of artificial intelligence (AI).

The analyst from Morgan Stanley highlighted that the AI-enabling capabilities of ASM International are expected to drive robust growth for the company. A thorough analysis of the company’s revenue dynamics has led to a conviction in raising earnings estimates above the current guidance and consensus for the fiscal years 2025 and 2027. The firm anticipates consistent growth for ASM International going forward.

The upgraded outlook is further bolstered by the increasing order momentum observed for ASM International. Morgan Stanley suggests that there is a possibility for the company to revise its financial guidance upwards, which contributes to a more constructive stance on the stock. The new price target of €800 is based on a 45x earnings multiple for fiscal year 2025, which aligns with the valuation multiples of peers such as VAT Group.

Morgan Stanley also acknowledges a potential upside, with a pathway to a €1,000 price target and beyond, should ASM International deliver strong performance in the near term. However, the firm also cautions that the main risk to their positive thesis would be a downturn in AI sentiment and spending, which could lead to lower earnings estimates and a reduced earnings multiple for the company.

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