IQE dispels fears it will not meet guidance

IQE, a supplier of semiconductor wafer products and services, attempted to dispel fears that it will not meet earnings expectations for the second half, as it announced hitting key technology transfer milestones with solar cell manufacturer Solar Junction.

Fears that its second-half results might be impacted by a slowdown in sales from its wireless division, followed a 'sell' note by Investec on November 28th. However, IQE Chief Executive Drew Nelson commented: "As we approach the end of our financial year, we are also confident that we will meet our earnings expectations."

The comments came as IQE announced it had completed several key technology transfer milestones with Solar Junction.

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Commercial production of a '3Junction' wafer is expected to begin in the first half of 2013, initially with customer product qualification quantities, moving to volume production in the second half.

Broker Cenkos commented: "At the September interims IQE said it expected a 'very strong increase' in revenues and profits in the second half, and nothing has really changed in Wireless to derail that in our view - thanks partly to inventory restocking.

That being the case, we see the recent pullback as a buying opportunity, backed by a valuation which sits at seven times estimated 2013 EV/EBITDA [enterprise value/earnings before interest, tax, depreciation and amortisation] and a PEG [price earnings growth] ratio of 0.3 times averaged over estimates for 2013 and 2014."

CM