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Universal Display: Buy The Dip

Bill Maurer profile picture
Bill Maurer


  • Stock down more than 40% from 52-week high.
  • Guidance deserves another look.
  • The future of technology remains here.

It's been a rough couple of months for shares of Universal Display Corp. (NASDAQ:OLED). As seen in the chart below, shares are now down more than 40% from their yearly high as the narrative surrounding OLED technology has shifted quite a bit. While the latest leg down came after disappointing guidance at the recent earnings report, I think the name is definitely worth another look at these levels.

(Source: Yahoo! Finance)

When consumers think of organic light emitting diode ("OLED") technology, the first thing that comes to mind recently is Apple's (AAPL) iPhone X. The smartphone was a major shift for display technology for Apple, switching to an OLED screen from a traditional LCD one. As concerns have built that iPhone X sales may not have been as strong as some hoped, shares of Universal Display have sold off quite a bit. This year, some rumors suggest Apple may launch two new OLED powered phones.

However, it's not just smartphones that use this technology. As you can read from the latest conference call transcript, OLED technology powers tablets, televisions, etc. The company recently signed a new supply deal with Samsung (OTCPK:SSNLF) that will go through 2022. Sales of these products are soaring, which is why Universal Display saw record revenues in 2017. While 2018 will see a growth slowdown, things are expected to pick back up next year.

That gets me to the latest earnings report. The company blew away estimates, highlighted by a revenue beat of more than $15 million, while also reporting a solid 8 cent beat on the adjusted bottom line. Unfortunately, as the link in my opening detailed, sales guidance for 2018 was a bit light, with management calling for $350 million to $380 million versus the street at $397.30 million. That gets me to the following quote from the conference call:

This article was written by

Bill Maurer profile picture
I am a market enthusiast and part-time trader. I started writing for Seeking Alpha in 2011, and it has been a tremendous opportunity and learning experience. I have been interested in the markets since elementary school, and hope to pursue a career in the investment management industry. I have been active in the markets for several years, and am primarily focused on long/short equities. I hold a Bachelor of Science Degree from Lehigh University, where I double majored in Finance and Accounting, with a minor in History. My major track focused on Investments and Financial Analysis. While at Lehigh, I was the Head Portfolio Manager of the Investment Management Group, a student group that manages three portfolios, one long/short and two long only. I have had two internships, one a summer internship at a large bank, and another helping to manage the Lehigh University Endowment for nearly a year. Disclaimer: Bill reminds investors to always do their own due diligence on any investment, and to consult their own financial adviser or representative when necessary. Any material provided is intended as general information only, and should not be considered or relied upon as a formal investment recommendation.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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