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Strength Seen in Universal Display (OLED): Can Its 5.7% Jump Turn into More Strength?

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Zacks Equity Research
·2 min read
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Universal Display Corp. (OLED) shares rallied 5.7% in the last trading session to close at $199.81. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 19.2% loss over the past four weeks.

The increase in share price can be attributed to growing optimism surrounding the uptake of organic light emitting diode (“OLED”) technology across wide variety of industries including smartphones, television, virtual reality devices and automotive markets. The OLED technology is expected to slowly replace light emitting diodes (“LED”) and liquid crystal display (“LCD”) technologies due to energy efficiency and higher contrast ratio, among other factors.

Universal Display is one of the dominant players in the OLED space and boasts an impressive portfolio of 5,000 patents (issued and pending) worldwide.

Moreover, the company expects the installed base of OLED square meter capacity to increase by nearly 50% at the end of 2021 over installed base at the end of 2019, which will boost revenue opportunities for the company.

The company is also developing its novel Organic Vapor Jet Printing ("OVJP") manufacturing technology for OLED panels to boost adoption. It is also advancing work on its commercial blue phosphorescent system, which bodes well for the company’s growth prospects in the long run.

Price and Consensus

Price Consensus Chart for Universal Display
Price Consensus Chart for Universal Display

This organic light-emitting diode technology company is expected to post quarterly earnings of $0.67 per share in its upcoming report, which represents a year-over-year change of -16.3%. Revenues are expected to be $114.44 million, up 1.9% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Universal Display, the consensus EPS estimate for the quarter has been revised 3.4% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on OLED going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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