On Friday, CFRA raised the price target on Universal Display (NASDAQ: NASDAQ:OLED) to $172 from the previous target of $170, while maintaining a Hold rating on the stock. The adjustment follows Universal Display's announcement of a strong first-quarter performance, 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.
The company also adjusted its full-year guidance upward, reflecting confidence in its business trajectory. The 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%.
Moreover, royalty and license fees saw a 24% increase to $68 million. The analyst noted that the first quarter saw an unusually high volume of sales from Samsung (KS:005930), accounting for 41% of total sales compared to 30% in the first quarter of 2023, which is expected to normalize throughout the year.
Universal Display's continued advancements in OLED technology are seen as a positive sign, particularly with the development of phosphorescent blue OLED materials. These materials, which are touted for their greater energy efficiency, contributed $2 million in developmental sales in the first quarter. Still, the firm anticipates stronger results to be necessary before projecting any growth associated with these innovations.
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. The stock price target is set at 35 times the firm's 2024 EPS view, slightly above Universal Display's three-year average of approximately 34 times. Despite the positive outlook on technology adoption, the analyst also pointed out that consumer electronics volumes remain soft.
InvestingPro Insights
Following CFRA's updated price target on Universal Display (NASDAQ: OLED), real-time data from InvestingPro provides additional context to the company's financial health and market performance. The company's market capitalization stands at a robust $7.42 billion, with a current P/E ratio of 36.8, reflecting a premium valuation compared to the market.
This is slightly adjusted downwards to 33.86 when considering the last twelve months as of Q1 2024. Despite a modest revenue growth of 2.45% over the last twelve months, the company has demonstrated a substantial quarterly revenue growth rate of 26.67% in Q1 2024. The gross profit margin is particularly strong at 75.36%, indicating efficient operations and cost control.
Universal Display's financial stability is further underscored by an InvestingPro Tip highlighting that the company holds more cash than debt on its balance sheet, which is a reassuring sign for investors.
Moreover, the company has a track record of increasing its dividend for 7 consecutive years, with a notable dividend growth of 33.33% in the last twelve months as of Q1 2024. This commitment to returning value to shareholders is coupled with the company being profitable over the last twelve months and analysts predicting profitability for the year ahead.
For investors seeking more in-depth analysis and additional InvestingPro Tips, there are 7 more tips available that could provide further guidance on Universal Display's stock performance. As you consider these insights, remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. This could be an excellent opportunity to make more informed investment decisions based on comprehensive data and expert analysis.
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