Edison Investment Research Limited
Edison Investment Research Limited: IQE (IQE): At the heart of 5G
transformation
11-Dec-2020 / 08:44 GMT/BST
London, UK, 11 December 2020
IQE (IQE): At the heart of 5G transformation
The breadth of IQE's technology portfolio and ability to serve compound
semiconductor chip customers in the US and Asia puts it in a good position
to benefit from rising demand for compound semiconductor applications for 5G
and connected devices. Infrastructure roll-out appears relatively unaffected
so far by the coronavirus pandemic. Global handset shipments are expected to
pick up in 2021, potentially stimulated by new 'must-have' AR apps enabled
by 5G connectivity and world-facing time-of-flight (ToF) devices, supporting
a trebling of PBT in FY21.
IQE's share price has more than recovered the ground lost during the panic
selling in March. At current levels, IQE is trading in line with the mean
EV/EBITDA multiples of the sample of companies engaged in manufacturing
VCSEL epitaxy. Given IQE's broader product portfolio, we believe it is
reasonable for IQE to trade on multiples that are at the upper bound of this
sample. However, we believe share price improvement will require greater
visibility of how handset demand will be affected by any pandemic related
recession in 2021 and whether the switch to 5G and the availability of as
yet unknown 'must-have' AR apps will be sufficient motivation for
cash-strapped consumers to justify upgrading their handsets.
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(END) Dow Jones Newswires
December 11, 2020 03:44 ET (08:44 GMT)
