What happened

Shares of Universal Display (OLED -1.54%) fell as much as 13.5% on Friday, bouncing off that bottom near 11:15 a.m., EDT. The developer and reseller of technologies and materials for organic light-emitting diode (OLED) panels reported mixed second-quarter results on Thursday evening. Investors shrugged off a solid revenue reading to focus instead on the soft bottom-line result and a relatively modest near-term revenue outlook.

So what

Universal Display's second-quarter sales surged 124% year over year, landing at $130 million. Earnings jumped from $0.02 to $0.85 per share. Your average analyst had been looking for earnings near $0.87 per share on top-line sales in the neighborhood of $127 million.

Looking ahead, management elected to leave its full-year revenue target unchanged at approximately $545 million. Here, the current Street consensus calls for $559 million, just below the top end of the given guidance range.

Person scratching his head, looking at two large chalk arrows on the wall, pointing in opposite directions.

Image source: Getty Images.

Now what

The beefy year-over-year comparisons didn't impress anybody, because the year-ago period represented the darkest days of business operations in the shadow of COVID-19 lockdowns. Holding the full-year sales target steady while reporting strong top-line results in the second quarter implies that the coming two quarters might deliver softer results. CFO Sid Rosenblatt said as much on the earnings call.

"We are comfortable with our current guidance," Rosenblatt said. "At the same time, there are some uncertainties that are related to the chip shortage and the pandemic that we're keeping an eye on to see whether it's going to impact it."

In other words, management is taking a conservative view of the short-term future due to the dual clouds of another COVID spike and an ongoing shortage of semiconductors. Universal Display's OLED screens rely on a variety of chips, both to drive the display panels themselves and to power the various electronic devices -- like TVs, smartphones, cars, fitness trackers -- where they are installed.

I don't mind Universal Display's leaders sketching up their business plans with an abundance of caution. The long-term picture hasn't changed, and now you can buy the stock for more than 20% below January's 52-week highs. Buying more Universal Display shares at a discount strikes me as a good idea.