ASML.US (ASML.US) backlog may increase 44% to 56 billion euros, Bernstein is bullish by nearly 70%

The Zhitong Finance App learned that on Monday, Bernstein pointed out in a newly released research report that although ASML.US (ASML.US) has stopped disclosing new orders and backlog order data. By analyzing changes in customer advance payments and contract liabilities, the bank estimates that Asmack's backlog of orders in the third quarter of 2026 may have reached a record level of about 56 billion euros, an increase of about 44% from the 38.8 billion euros last disclosed in the fourth quarter of 2025. This indicates that the company's demand for future equipment may be stronger than market expectations. In particular, the visibility of orders for extreme ultraviolet lithography (EUV) equipment has been extended to 2028.

Bernstein believes that Asmack's current upward business cycle is expected to continue until 2028 and beyond, reaffirming its “outperforming market” rating and maintaining the target prices of 2,500 euros for Amsterdam listed stocks and 2,859 US dollars for US stocks. Based on the closing price of €1477.20 in Amsterdam on October 16, the potential upside is around 69%.

Since the fourth quarter of 2025, Asma will no longer disclose data on new orders and backlog orders. The amount of new quarterly orders that the company last announced was 13.2 billion euros, while the backlog of orders was 38.8 billion euros. Since then, it has been difficult for investors to directly judge the company's equipment demand for the next few quarters or even years.

However, Bernstein analyst David Dai and his team discovered that contract debt data in Asmack's balance sheet can still provide important clues to determine order trends.

The contractual liabilities mainly reflect payments made by the customer, but which Asmack has not yet recognized as revenue, including advance payments for future equipment delivery, installation, upgrades and services. Bernstein believes that the vast majority of these are related to prepayments for equipment orders, so they can be used as an important indicator for estimating the size of the backlog of orders.

According to the bank's estimates, Asmack's total contract debt for the third quarter reached a record 24.6 billion euros, up from 19.4 billion euros at the end of 2025. Among them, non-current contract liabilities increased sharply from 3.6 billion euros in the second quarter to 9 billion euros in the third quarter, increasing by about 150% in a single quarter.

Bernstein emphasized the importance of the rapid growth in non-current contract liabilities, since such payments usually correspond to equipment or services that will not be delivered until a year later. This means that not only are there sufficient short-term orders, but support from 2028 and beyond delivery requirements may also be increasing.

By comparing the order data disclosed by Asmack in the past with the customer's advance payment situation, the bank found that there is a relatively stable relationship between the two. According to historical data, the total amount of orders that Asmack has not yet delivered is usually about 2.2 times the customer's advance payment and related contract liabilities, so this relationship can be used to estimate the company's current backlog of orders. This means that when considering some contractual liabilities related to the service business, Asma customers usually need to prepay about 35% to 40% of the equipment order amount, which is close to the upper limit of the 20% to 50% prepayment range previously disclosed by the company.

Based on contract liabilities of about 24.6 billion euros in the third quarter, Bernstein estimates that Asmack's backlog may have reached about 56 billion euros, an increase of about 17.2 billion euros over the 38.8 billion euros last disclosed at the end of 2025, an increase of about 44%.

According to the estimated delivery time of orders, the bank estimates that about 35 billion euros of backlog orders will be fulfilled within the next year, while another 21 billion euros will correspond to delivery requirements after one year.

Bernstein pointed out that this estimate is basically consistent with Asmack's management's previous statement on the 2027 capacity reservation situation, which also means that the market may have underestimated the company's revenue certainty for the next two years. However, 56 billion euros are not Asmack's latest officially disclosed order data, but rather an estimated value derived from the relationship between contract liabilities and historical orders.

Looking at specific products, Bernstein believes that orders for Asmack's advanced lithography equipment are particularly strong. The bank pointed out that according to the management's previous statement, Asmack's 2027 EUV equipment production capacity has already been booked by customers. Bernstein expects sales of EUV equipment to reach around 24 billion euros in 2027.

Meanwhile, according to the bank's model estimates, sales of deep ultraviolet lithography (DUV) equipment and measurement equipment in 2027 will be about 19 billion euros, and currently about 60% of related production capacity may have received order support.

This means that in addition to EUV equipment, DUV equipment also has a strong demand base, and the remaining production capacity may still provide room for subsequent order growth and price increases.

More noteworthy is the demand for EUV equipment in 2028. Bernstein expects Asmack's sales of EUV equipment to reach around 35 billion euros in 2028. If the estimated backlog of around 21 billion euros with a delivery period of more than one year is considered all 2028 EUV equipment orders, then around 60% of its 2028 EUV revenue is likely to have been supported by customer advance payments.

The bank believes that this indicates that Asmack's revenue visibility will increase significantly over the next two years, and in particular, demand for EUV equipment may continue to be strong. However, the 2028 order coverage rate described above is based on strong model assumptions, including backlog orders with a delivery period of more than one year corresponding to 2028 EUV equipment, so there is still uncertainty.

Bernstein predicts that as customers continue to expand production capacity and equipment procurement for advanced processes, Asmack's backlog of orders is expected to continue to grow in the next few quarters, and the fourth quarter may further set a new record.

Improved order visibility has also further strengthened Bernstein's confidence in Asmack's performance growth over the next few years. The bank's latest financial model predicts that in 2026, Asmack's revenue will reach 45.08 billion euros, an increase of 37.8%; in 2027, revenue will further increase by 27.5% to 57.396 billion euros; and in 2028 it is expected to reach 75.602 billion euros, an increase of 31.7% year on year.

In terms of profit, Bernstein expects Asmack's operating profit of 18.921 billion euros in 2026, growing to 25.791 billion euros in 2027, and further reaching 37.213 billion euros in 2028.

As the business scale expands and the product structure improves, the bank expects Asmack's operating profit margin to increase from 42.0% in 2026 to 44.9% in 2027, and reach 49.2% in 2028.

In terms of earnings per share, Bernstein expects Asmack's diluted earnings per share of €43.23, €57.18 and €84.18 for 2026, 2027 and 2028, respectively. Among them, the 2028 earnings per share forecast is about 18% to 19% higher than the agreed market forecast.

Bernstein believes that as orders continue to increase, Asmack is still expected to benefit from the expansion of production capacity and rising equipment prices in the future, and there is a possibility that profit forecasts will increase further.

Based on strong potential order demand and long-term growth prospects, Bernstein maintained Asmack's “outperforming market” rating and maintained a target price of 2,500 euros for shares listed in Amsterdam. For Asmack, which is listed on the US stock market, the bank maintains a target price of 2,859 US dollars.

Bernstein's valuation method mainly uses a price-earnings ratio of 30 times the expected earnings per share for the fifth to eighth quarters. The bank believes that Asmack's most important investment logic at present is that its demand for equipment orders may be stronger than market expectations, and this demand has gradually extended to 2028 and beyond. As EUV equipment production capacity continues to be booked and demand for DUV equipment remains resilient, the company is expected to continue to benefit from the semiconductor capital expenditure cycle in the next few years.

However, Bernstein also suggested that Asmack still faces risks such as higher than expected EUV technology upgrade costs, weakening global demand for wafer manufacturing equipment, and less rapid iteration of advanced process technology than expected.