What: Shares of OLED technology researcher Universal Display (OLED +0.18%) jumped 22% higher in May, according to S&P Capital IQ data. The surge started with an instant 12% boost when Universal Display reported rock-solid results for the first quarter, and followed up with lighter gains as the company reportedly gained a new top-shelf customer.
So what: The company missed Wall Street's first-quarter revenue estimates by 3% due to a planned decline in sales of OLED host materials. But Universal Display also delivered earnings of $0.03 per share while analysts would have settled for just $0.01 per share, and the sales outlook for the rest of the year remained strong. Furthermore, mobile products giant Apple appears to have jumped aboard the OLED bandwagon. Cupertino is always a welcome name in anybody's customer Rolodex.
Now what: Sure, Universal Display is losing some host material sales, but makes up for that loss with rapid market adoption of its OLED emitter technologies. The big catalyst that every Universal Display investor has been dreaming about for many years is mass-market production of large OLED television screens, and that hockey stick moment draws nearer thanks to a fresh partnership with LG Display just as 4K video displays dive into the mainstream. A handful of 55-inch TV screens adds as much to Universal Display's top and bottom lines as a bushel of tiny smartphone displays, so the first quarter's evidence of large-scale OLED TV production was a game-changer.
And again, Apple may not make big-screen TV sets (yet!), but its millions of smaller displays still add up to a significant market opportunity for small suppliers like Universal Display.
