Bearish positioning could favour of ASML on earnings day

BEARISH POSITIONING COULD FAVOUR OF ASML ON EARNINGS DAY

The Q2 earnings season in Europe kicks off in earnest next week with ASML ASML among the highlights, being the first of the bloc's equity heavyweights to report, ahead of SAP SAP, LVMH MC and Novo NOVO_B.

The world's biggest supplier of computer chip-making equipment has lost around 30% in market value since peaking one year ago with market sentiment turning increasingly bearish since, amid concerns including over growth next year.

But with expectations so low, some Wall Street banks see the potential for a rebound. While investors will look for clarity on 2026 and focus on order intake from top customer TSMC 2330, the setup could favour a positive surprise.

According to Citi analysts, investors are at their most negative on ASML in nearly a decade, and with valuations at multi-year lows, the bank believes that pessimism is overdone.

"A strong quarter or two of order intake could quickly change sentiment," they say. "Sentiment is so 'glass half empty' at present that many are likely biased to presume the worst (as opposed to this time last year when the opposite was the case)."

JPMorgan echoes that view, noting that shares could see a strong reaction even if the group were to simply meet order intake consensus of 4.8 billion euros ($5.6 billion).

ASML releases its numbers on July 16 before the market opens.

(Danilo Masoni)

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($1 = 0.8535 euros)