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Industry Analysts Just Made A Sizeable Upgrade To Their IQE plc (LON:IQE) Revenue Forecasts

Simply Wall St
·3 min read

Shareholders in IQE plc (LON:IQE) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The revenue forecast for this year has experienced a facelift, with analysts now much more optimistic on its sales pipeline. The market may be pricing in some blue sky too, with the share price gaining 26% to UK£0.57 in the last 7 days. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the latest consensus from IQE's seven analysts is for revenues of UK£158m in 2020, which would reflect a meaningful 13% improvement in sales compared to the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 87% to UK£0.0058. However, before this estimates update, the consensus had been expecting revenues of UK£144m and UK£0.0099 per share in losses. We can see there's definitely been a change in sentiment in this update, with the analysts administering a sizeable upgrade to this year's revenue estimates, while at the same time reducing their loss estimates.

See our latest analysis for IQE

AIM:IQE Past and Future Earnings June 16th 2020
AIM:IQE Past and Future Earnings June 16th 2020

The consensus price target rose 21% to UK£0.64, with the analysts encouraged by the higher revenue and lower forecast losses for this year. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic IQE analyst has a price target of UK£1.05 per share, while the most pessimistic values it at UK£0.42. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that IQE's rate of growth is expected to accelerate meaningfully, with the forecast 13% revenue growth noticeably faster than its historical growth of 7.1% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that IQE is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that analysts reduced their loss per share estimates for this year, reflecting increased optimism around IQE's prospects. They also upgraded their revenue forecasts, although the latest estimates suggest that IQE will grow in line with the overall market. There was also an increase in the price target, suggesting that there is more optimism baked into the forecasts than there was previously. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at IQE.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for IQE going out to 2022, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.