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Broker snap: FinnCap ups IQE price target
Wed, 08 Feb, 2012
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Broker snap: FinnCap ups IQE price target
Fri, 27 Aug 2010, 12:02:00
<b>IQE</b>, the world's largest merchant supplier of compound semiconductor wafers to the global wireless, consumer electronic, light emitting display and solar cell markets, is releasing results next week, and while FinnCap is not expecting things to have changed much since the July update, the second half of the year may present a brighter story. "IQE's highly operationally geared business model means the three key valuation drivers are wireless market expansion, wireless market share gains and application innovation for III-V materials. News on the former two will be dominated by discussions surrounding handset shipments, attachment rates and supply chain rationalisation. The latter will largely depend on positive indications from management surrounding optoelectronic applications," observes FinnCap analyst Dr. Paul Cornelius. "Positive segment financial reports on the non-wireless business streams within the high-growth VCSEL, CPV and LED space and a positive update on the emerging 50Gbit/s optical link devices, with Intel et al, should be seen as an early indicator of preparing compound semiconductors for the mainstream," Dr. Cornelius argues. The IQE share price has hit FinnCap's previous price target, set in January, of 25p. "Using the current PER [price/earnings ratio] of 21.5x results in a new fair value estimate of 29.4p," based on the broker earnings per share estimate of 2.4p for fiscal 2011. The "buy" recommendation is left unchanged.
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