Universal Display Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Universal Display (Nasdaq: PANL  ) surged more than 30% in early trading after news broke yesterday that Samsung had signed a six-and-a-half-year supplier contract with the company.

So what: For years, Samsung had been hedging its bets by signing only three-month extensions. Now, Universal Display can more confidently plan production of OLED technology for use in Samsung screens.

Now what: The deal is also apparently better. Rather than per-unit royalties -- a common risk-reducing measure in the early stages of a supplier relationship -- Universal Display will now be paid an upfront license fee. The implication? The company's OLED technology has proven itself. Don't be surprised if LG Display (NYSE: LPL  ) and peer manufacturers agree to similar terms. Do you agree? Would you buy at these levels? Weigh in using the comments box below.

Interested in more info on Universal Display? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

Motley Fool newsletter services have recommended buying shares of Universal Display. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 26, 2011, at 3:10 PM, jtothes wrote:

    I couldn't agree more with Tim. They have been making technological breakthroughs and refining their manufacturing processes, which has put them in this great position. I believe they will trading around $60-$65 dollars in the next 6 to 8 months.

  • Report this Comment On August 30, 2011, at 6:43 PM, manojv wrote:

    What's the actual $ amount that this contract will add to their bottom line? Anyone have a clue?

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