Barclays starts coverage of Apple supplier IQE at 'overweight'

Trading on 24 times' their estimates for its earnings per share in 2020, stock in IQE was on a 'premium' valuation but it did not look stretched, analysts at Barclays said.

In particular, the sole supplier of epitaxial wafers to Apple was set to see "substantial" near-term growth in the market for 3D sensors, the analysts said.

Reflecting that, the stock had run-up by 359% year-to-date.

Even so, given their estimates for a compound annual rate of growth in EPS of nearly 40%, Barclays sounded a bullish note, initiating coverage at 'overweight' and setting a target price of 210p.

"IQE as the leading supplier of epitaxial wafers is a key beneficiary of emerging growth in 3D sensors. Today IQE is the sole supplier of epiwafers to Apple's TrueDepth 3D camera and we see it as well positioned to grow rapidly due to both its Apple exposure and positioning with fast followers."