ASML Building Market Share
Kate DuBose Tomassi, 06.20.06, 11:02 AM ET
With ASML Holding continuing to gain market share, Banc of America Securities analyst Mark FitzGerald said shares of the semiconductor company appear to be a good value.
In a report issued Monday, the analyst said the Dutch ASML (nasdaq: ASML - news - people ) likely saw key contract wins at Toshiba (other-otc: TOSBF.PK - news - people ) and NEC (nasdaq: NIPNY - news - people ) during the quarter, giving it a presence at each of the major Japanese chip makers.
"With the share gains and mix shift to newer systems in 2007 we think ASML will grow even though we expect a contraction in the semiconductor cycle," the analyst said.
ASML appears to be on track to make its target of 20 to 25 immersion systems to be shipped in 2006, said FitzGerald. He estimated that the company will ship 55 to 70 systems in 2007.
Moreover, ASML appears to be ramping capacity and has negotiated a flexible arrangement with labor unions in the Netherlands to facilitate the ramp, according to the analyst.
Employees will work a 48 hour week but be paid for 40 hours during the ramp, he said. As demand falls, employees will work only 32 hours but be paid for 40. The arrangement should result in good leverage over the next year, he said.
FitzGerald maintained a "buy" rating and $26.80 target price on ASML shares.
ASML is one of Banc of America's top stock picks in the semiconductor capital equipment space. The other top pick is Taiwan Semiconductor Manufacturing (nyse: TSM - news - people ), rated "buy" with a $13 price target. The firm's least favorite stock in the category is Semiconductor Manufacturing International (nyse: SMI - news - people ), rated "sell" with a $6.10 target price. |
