On Tuesday, Needham increased its price target on shares of Universal Display (NASDAQ: NASDAQ:OLED) to $242 from the previous $198, while reiterating a Buy rating on the stock. The firm's outlook for Universal Display is positive, based on several factors set to drive the company's performance in the near term.
Universal Display, known for its organic light-emitting diode (OLED) technology, has recently updated its 2024 financial guidance, raising the lower end. This revision comes after the company's first-quarter earnings report for 2024, which highlighted potential growth areas for the coming year.
The company is anticipated to benefit from a more robust smartphone refresh cycle and a growing adoption of OLED technology in the IT sector. Furthermore, the scaling of Universal Display's new blue phosphorescent emitter is expected to contribute to the company's success. The firm also confirmed its progress towards meeting commercial specifications for its products within 2024.
Recent market data has revealed that shipments of OLED smartphones have surpassed those of traditional LCD smartphones in the first quarter of the year. This trend is bolstered by the launch of the new iPad Pro, Apple (NASDAQ:AAPL)'s first tablet featuring an OLED display, which is likely to increase the demand for IT-related OLED displays.
These developments are not only seen as immediate positive factors for Universal Display's revenue in the second half of the year compared to the first half but are also viewed as potential catalysts for growth in 2025, particularly with the anticipated revenue from the new blue emitter technology.
In other recent news, Universal Display reported a strong first quarter with sales reaching $165 million, marking a 27% increase year-over-year. The company's earnings per share (EPS) for the quarter were reported at $1.19, a 43% increase from the previous year, surpassing consensus expectations. Following these results, CFRA raised the price target on Universal Display to $172 from the previous target of $170, while maintaining a Hold rating on the stock.
In addition to this, the company adjusted its full-year guidance upward, reflecting confidence in its business trajectory. This growth in sales was primarily driven by a 33% year-over-year increase in materials sales, which totaled $93 million, with unit volume rising by 37%.
Royalty and license fees saw a 24% increase to $68 million. In the backdrop of these developments, Universal Display's continued advancements in OLED technology are seen positively, particularly with the development of phosphorescent blue OLED materials.
Lastly, the analyst has increased the '24 EPS forecast by $0.21 to $4.92 and the '25 EPS projection by $0.12 to $5.87, citing improving demand for OLED technology across multiple end markets. These are some of the recent developments regarding Universal Display.
InvestingPro Insights
As Universal Display (NASDAQ: OLED) continues to innovate in the OLED technology space, real-time data from InvestingPro provides a comprehensive view of the company's financial health and market performance. With a robust market capitalization of approximately $9.9 billion and a high P/E ratio of 45.19, Universal Display showcases its prominence in the industry. The company's significant gross profit margin, standing at 75.36% for the last twelve months as of Q1 2024, underscores its efficiency in generating revenue relative to the cost of goods sold.
InvestingPro Tips highlight that Universal Display holds more cash than debt on its balance sheet and has demonstrated commitment to shareholder value by raising its dividend for 7 consecutive years. Additionally, the company's stock is trading near its 52-week high, which may interest investors looking for stocks with strong momentum. For those considering an in-depth analysis, InvestingPro offers more tips, including insights on valuation multiples and profitability forecasts. Interested readers can unlock these valuable tips and more with a subscription to InvestingPro, using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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