Yahoo Finance IQE plc (LON:IQE) Full-Year Results: Here's What Analysts Are Forecasting For This Year
As you might know, IQE plc (LON:IQE) recently reported its yearly numbers. It was a pretty bad result overall; while revenues were in line with expectations at UK£140m, statutory losses exploded to UK£0.045 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for IQE
Taking into account the latest results, the consensus forecast from IQE's six analysts is for revenues of UK£143.6m in 2020, which would reflect a credible 2.5% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 78% to UK£0.0099. Yet prior to the latest earnings, the analysts had been forecasting revenues of UK£146.9m and losses of UK£0.0083 per share in 2020. While this year's revenue estimates dropped there was also a loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target was broadly unchanged at UK£0.58, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values IQE at UK£1.00 per share, while the most bearish prices it at UK£0.20. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the IQE's past performance and to peers in the same industry. We would highlight that IQE's revenue growth is expected to slow, with forecast 2.5% increase next year well below the historical 7.1%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than IQE.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on IQE. Long-term earnings power is much more important than next year's profits. 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..
You still need to take note of risks, for example - IQE has 2 warning signs we think you should be aware of.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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