ASML - Tokyo Electron's Massive Multiple Expansion Leads Me To A Downgrade

2024-05-28 09:10:45 ET

Summary

• Tokyo Electron's share price has nearly doubled since I last covered it in January 2023.
• A meaningful part of the performance came from an expansion of the P/E multiple.
• Tokyo Electron's guidance was on point since January 2023.
• Even under bullish assumptions, the currently lofty valuation is hard to justify, leading to a rating downgrade.

Introduction

On January 27, 2023, I wrote my first article on Tokyo Electron Limited ([[TOELF]]/[[TOELY]]) called " Tokyo Electron: Underfollowed EUV Niche Market Leader ". Tokyo Electron ((TEL)) is a Japanese company that manufactures and sells Semiconductor Production Equipment ((SPE)). TEL is broadly diversified throughout the process steps like Deposition, Coater/Developer, Etch, and Cleaning....

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