Why Universal Display Shares Are Going Dim

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 LED supplier Universal Display (Nasdaq: PANL  ) plummeted 18% today after its quarterly results and guidance missed Wall Street expectations.

So what: The company's third-quarter miss was so wide -- EPS loss of $0.12 on revenue of $12.5 million versus Wall Street's estimate of a $0.02 profit and a top-line of $18.6 million -- that analysts have no choice but to lower their valuation estimates yet again. Management cited weaker materials sales and license fees for the miss, reinforcing serious concerns over a prolonged slowdown in the industry.

Now what: Management now sees full-year revenue of $80 million-$82 million, down from its prior view of $90 million-$110 million and well below the consensus of $100 million. "We have never taken a short-term focus," CEO Steve Abramson reassured analysts in a conference call. "We believe more strongly than ever that despite this near-term slowdown a road to greater OLED adoption continues to stretch far and wide before us." With the stock now down more than 50% over the past year and trading at a forward P/E of 14, now might even be a good time to buy into those still-attractive long-term trends.

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


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  • Report this Comment On November 08, 2012, at 5:37 PM, sidneyleejohnson wrote:

    "Management cited weaker materials sales and license fees for the miss, reinforcing serious concerns over a prolonged slowdown in the industry."

    That conclusion is shameful.

    Just take a look at some of the analyst deep dives in Korea for the oled industry like this one:

    http://www.kdbdw.com/bbs/download/164345.pdf?attachmentId=16...

    and appreciate that SMD is ramping up to increase oled capacity 5 fold over the next 2 years via lines V1, V2, A2E, and A2 phase 3. What is at stake is exactly when they kick into production and when they hit 100% capacity. SMD is running its existing lines at 100% capacity. this is not even remotely supportive of a serious concern about a prolonged slowdown in the industry. The industry is on fire and straining to add more capacity. Not just within SMD but many more oem's want in as well. AUO and LG are gearing up to produce oled displays as well as others. lighting is also in the pipeline. While you may have back tracked a bit with "Now what" ... I think the conclusion in "So What" was WAY out of line with the current status of the oled technology diffusion curve.

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