Despite today's 6.2% jump to $864.2, ASML may soon be running into resistance as it is now within range of its average analyst target price of $843.27. With an average rating of buy, and analysts assigning target prices from 602.1194 to 980.45325 dollars per share, investors will be asking themselves if the Farm & Heavy Construction Machinery stock can sustain this bullish run.
The market seems to share this optimistic view, since ASML has a short interest of only 0.8% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
We can make inferences about the market sentiment surrounding ASML by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.
At 17.8%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.
Overall, there is mixed market sentiment on ASML because its an analyst consensus of little upside potential, a buy rating, a very low short interest, and a very small number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.
Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are ASML's recent cash flows:
| Date Reported | Cash Flow from Operations ($ k) | Capital expenditures ($ k) | Free Cash Flow ($ k) | YoY Growth (%) |
|---|---|---|---|---|
| 2024 | 11,166,200 | 2,067,200 | 9,099,000 | 176.75 |
| 2023 | 5,443,400 | 2,155,600 | 3,287,800 | -54.37 |
| 2022 | 8,486,800 | 1,281,800 | 7,205,000 | -27.55 |
| 2021 | 10,845,800 | 900,700 | 9,945,100 | 171.31 |
| 2020 | 4,627,600 | 962,000 | 3,665,600 | 46.05 |
| 2019 | 3,276,400 | 766,600 | 2,509,800 |
