Morningstar Analysts Raise Fair Value Estimates for Top Stocks

The second-quarter earnings season has come to an end, and Morningstar analysts have been busy updating their fair value estimates for the stocks they cover.

Roughly 90% of the 835 US-listed stocks covered by Morningstar analysts have reported earnings so far. This includes major names like Nvidia NVDA, which is scheduled to release its results next week, and Broadcom AVGO, Adobe ADBE, and Oracle ORCL, which will report their earnings in September.

The average fair value estimate increase during the second-quarter earnings season was 1.5%, down from last quarter's 2.8%. The energy and technology sectors saw the highest increases, with 20.6% of energy stocks seeing a fair value increase of at least 10.0%, and an average increase of 5.8%. Among tech companies, 15.7% had fair value increases of at least 10.0%, and an average increase of 3.0%.

Morningstar identified 10 stocks with the largest percentage increases in their fair value estimates during Q2 earnings. These include ASML, which saw its fair value estimate rise to $2,050 from $1,400; Expand Energy, whose fair value increased to $144 from $101; and Lam Research, which had a fair value increase of 41% to $310.

The analysts at Morningstar provided additional information about each stock. For example, they noted that ASML intends to expand its capacity for Low-NA EUV and DUV immersion systems by 30% in 2027 and another potential 30% in 2028. This expansion would bring the company's capacity to 85/110 Low-NA EUV systems by 2027-28, compared with today's 65 and 130 units, respectively.