There is emerging speculation that technology designed by compound wafer company IQE (IQE:AIM) could feature in the new Apple smartphone, the iPhone 8. If true, this could have substantial earnings implications for the company, and possibly see the share price more than double from current 87.25p levels to 185p, according to broker Peel Hunt.

Cardiff-based IQE designs advanced semiconductor wafers used in many emerging applications, from infrared sensing to laser-based photonics. Rumours imply that the iPhone 8, expected to launch sometime in the autumn, will feature 3D sensing and gesture recognition functionality based on vertical cavity surface-emitting laser technology (VCSEL), in which IQE is believed to be a world leader.

If proven and ‘the upcoming iPhone launch is successful, it is also highly likely that we would upgrade our forecasts substantially,’ states Andrew Shepherd-Barron, an analyst at Peel Hunt.

In 2016 Apple sold 211.9m iPhones and it has shifted another 129.1m handsets year-to-date, according to data supplied by Statista.

Having worked through several scenarios, Shepherd-Barron believes his year to 31 December 2018 earnings per share (EPS) estimate of 3.4p could soar as high as 15.4p on a best case basis. His mid-point forecast is 6.2p, on which the 2018 price to earnings (PE) multiple would stand at 14.1, or 16.1-times based on the analyst’s 100p target price.

At the time of writing IQE was unable to confirm or deny the speculation. (SF)

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