IQE, the leading global semiconductor materials maker, expects to report its highest-ever earnings for FY 2011, boosted by a double-digit growth across its wireless and opto-electronics divisions.

Improvement in wireless sales reflected the rising acceptance and superiority of portable devices such as smartphones and tablets using Gallium Arsenide ("GaAs") technology, and by the rising acceptance of advanced Gallium Nitride ("GaN") technology in high power wireless applications such as radar and infrastructure. Increase in optoelectronic sales was driven by a wide variety of applications including consumer, industrial and advanced high efficiency solar power applications.

IQE is scheduled to release its final results for the year ended 31 December 2011 on Wednesday and expects its revenues for FY 2011 to beat £75 million, up from £73 million in the FY 2010. Earnings before interest tax depreciation and amortisation (EBITDA) are projected to grow not less than £13.7 million. Net debt is estimated to be less than £4 million.

According to the group's announcement in October, second half sales of the year were badly affected by inventory corrections in the supply chain related to market share swings amongst a couple of IQE's important customers. These inventory corrections have unwound as expected and by the end of the first quarter of FY 2012, these shall be completely resolved.

While commenting on the trading update, CEO Dr Drew Nelson said: "The Board remains confident that IQE is well positioned to build further on its robust business model and powerful market position to deliver strong growth in 2012 and beyond."

Brokers' Views:

- Espirito Santo Investment Bank recommends 'Buy' rating on the stock with a target price of 34 pence per share
- Singer Capital Markets assigns 'Buy' rating with a target price of 33 pence per share
- Canaccord Genuity gives 'Buy' rating with a target price of 65 pence per share
- Liberum Capital gives 'Buy' rating with a target price of 35 pence per share
- FinnCap assigns 'Buy' rating with a target price of 30 pence per share

Below is a summary of sector comparisons in terms of price earnings, earnings per share, dividend per share, dividend yields, return on equity and price-to-book ratio. The table explains how the company is performing against its peers/competitors in the sector. The table below represents top ten companies based on market capitalisation.

IQE FY earnings results

Earnings Outlook

- Espirito Santo Investment Bank estimates the company to report revenues of £75.00 million and £83.60 million for the FY 2011 and FY 2012 respectively with pre-tax profits (pre-except) of £6.60 million and £8.80 million. Earnings per share are projected at 1.50 pence for FY 2011 and 1.70 pence for FY 2012.

- Singer Capital Markets projects the company to record revenues of £75.00 million for the FY 2011 and £84.00 million for the FY 2012 respectively with pre-tax profits (pre-except) of £7.00 million and £9.00 million. Profit per share is estimated at 1.30 pence and 1.60 pence for the same periods.

- Canaccord Genuity expects IQE to earn revenues of £75.20 million for the FY 2011 and £84.20 million for the FY 2012 respectively with pre-tax profits of £8.00 million and £9.80 million. EPS is projected at 1.46 pence for FY 2011 and 1.60 pence for FY 2012.