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 (PANL 0.03%) soared nearly 10% on news that Samsung will begin using its materials in its upcoming Galaxy 5 phone, slated to enter production this month.
So what: Analysts at Cowen mentioned this morning that its "contacts" have indicated that Samsung will be producing full HD AMOLED displays for the Galaxy 5. Universal Display's green PHOLEDs will be part of that process, and Cowen expects it to show up on second-quarter revenues. Cowen reiterated its "buy" rating on the stock (of course), and shares rose through most of the day as a result.
Now what: Universal Display's revenue has already increased by roughly 150% in the past two years, despite a dip in the third quarter. Net income is also finally in positive territory and has moved in near lockstep with revenue growth. Universal Display is currently very expensive, with a 159 P/E ratio after the pop, but its shares have fallen far from where they were two years ago. Eventually the profit will catch up to the share price. I don't think that'll happen in the second quarter, but if Cowen is correct, then Universal Display will soon be a lot closer to reasonable territory.
