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A short squeeze and positive sell-side notes help Universal Display (PANL +11.4%) shoot back...

A short squeeze and positive sell-side notes help Universal Display (PANL +11.4%) shoot back above $30 following its mixed Q4 results. Cowen and Deutsche both think PANL's 2013 guidance is conservative, and the former sees Samsung's Galaxy S IV, OLED TV sales, and new licenses all acting as catalysts. On the earnings call, management noted LG Display (LPL) plans to spend 54% of its 2013 capex on OLED production, and that it's discussing "commercialization roadmaps" with partners for its encapsulation tech, which is seen as key to flexible OLEDs.
Comments (2)
  • They would be right to be conservative, and as in the past, they may not be conservative enough. OLED TVs are very unlikely to materialize this year, and further licensing is likely waiting on that, which is in turn possibly waiting on technical problems with the lifetime of blue emitter materials. People are willing to turn over a few hundred dollar smart phone every few years; not so much for a TV you paid several thousand dollars for. http://bit.ly/WuKxnA has a nice summary.

     

    Furthermore, there is evidence that their main customer (Samsung) is something of a "frenemy", who is looking for variant material sources, and may be getting lots of development info but not be sharing much in return. If you're not aware of what a big risk being dependent on a single customer is, have a look at AMSC's 3yr chart (the stock lost 80% of its value).

     

    There are plenty of competing technologies for everything mentioned here, and thus lots of execution risk to go along with what I believe is real potential. Also, I don't see much evidence of a real short squeeze yet. It looks like more of a relief rally. The delayed, publicly published, bi-monthly short interest percentage has actually come down, and so has the rebate rate over the last few days, according to my private sources.
    28 Feb 2013, 08:08 PM Reply Like
  • If you want a real short squeeze candidate, have a look at CSTR: PE of 11 (vs PANL's 132) and short interest over 50% almost twice that of PANL's. The rebate rate has come down recently, but is still 80x that of PANL, and with those figures, could easily shoot back up going into options expiration.
    28 Feb 2013, 09:28 PM Reply Like
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