Universal Display (OLED) Shares closed a 2.94% higher to $67.91, affected by Cowen & Co. increase in price target from $65 to $75. The firm reinstated their “outperform” rating. The hike on the price target occurred after Cowen’s attendance in the “Display Week” conference held in San Francisco earlier this week.
Barron’s cited a note from the firm explaining the reasons behind the hike “A key theme of Display Week was increasing realism: flat panel displays like windows to the real world, VR experiences that transport the user to new realms, and AR seamlessly enriching the field of view. We raise OLED PT to $75 (vs. $65) on further evidence of share gains.”
Needham & Co increased its price target on the Trenton, from $62 to $69. After the conference the firm believes that OLED technology will be increasingly more prevalent in the manufacture of mobile phones and other devices. The stock was moved from neutral to boy by Goldman Sachs on Monday with its price target raised from $55 to $76.
Universal Display’s average 30-day volume of 775,359 shares per day saw a drastic change today; an estimate of 1.02 million shares was moved.
In a related note, Raymond James’s Tavis McCourt today picks up on recent chatter surrounding the report a week ago of fiscal Q2 reports by equipment maker Applied Materials (AMAT), which brought further evidence of OLED use by Apple (AAPL) next year.
During its F2Q16 earnings call, Applied Materials, a manufacturer of the machines used in production of displays, indicated that it had experienced a nearly 4x increase in orders for display equipment, suggesting that the company is gearing up for the new demand coming from Apple for 2017 iPhones. This data point marks the latest in a series that points towards Apple moving away from the LCD display in what will likely be the “iPhone 7s.” The replacement would be an OLED screen, which is lighter and can be shaped/curved. We note that this is consistent with other rumors suggesting that Apple will be making some meaningful changes to its iPhone form factor in coming models including a glass casing instead of a metal casing and a curved/convex surface. Given the success of the Samsung Galaxy Edge series of smartphones, investors seem to be convinced (and we concur) that a curved surface likely will drive an above trend product cycle on the iPhone product line, likely in 2017.
Apple’s influence on the benefits of Universal Display is key; the Silicon Valley giant will start integrating organic LED technology in their iPhones beginning next year.
Universal Display flexes their muscle through a considerable increase in net income, its financial position consolidated, with debt levels that may be considered realistic and aside from this, a growth in earnings per share may be observed. Conversely, some of the less desirable company traits are a disappointing return on equity, premium valuation and weak operating cash flow. These may deter some investors from moving forward.