IQE plc (LON:IQE) Just Reported, And Analysts Assigned A UK£0.22 Price Target

Shareholders will be ecstatic, with their stake up 21% over the past week following IQE plc's (LON:IQE) latest yearly results. Revenues were in line with expectations, at UK£118m, while statutory losses ballooned to UK£0.04 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Following last week's earnings report, IQE's three analysts are forecasting 2025 revenues to be UK£116.7m, approximately in line with the last 12 months. The loss per share is expected to ameliorate slightly, reducing to UK£0.038. Before this earnings announcement, the analysts had been modelling revenues of UK£118.7m and losses of UK£0.039 per share in 2025. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

See our latest analysis for IQE

The consensus price target fell 55% to UK£0.22despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic IQE analyst has a price target of UK£0.24 per share, while the most pessimistic values it at UK£0.20. This is a very narrow spread of estimates, implying either that IQE is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would also point out that the forecast 1.1% annualised revenue decline to the end of 2025 is better than the historical trend, which saw revenues shrink 6.4% annually over the past five years By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 22% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect IQE to suffer worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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. We have estimates - from multiple IQE analysts - going out to 2027, 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 (and 1 which shouldn't be ignored) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.