Universal Display Shares Feel the Apple Halo Effect
Today, shares of Disruptive Technology company and Tematica Select List resident Universal Display ([stock_quote symbol=”OLED”]) popped and closed the day up just under 5% to close at $70.35. There were several catalysts behind the move including more chatter over Apple (AAPL) moving its next iteration of the iPhone to organic light emitting diode display technology, and a new Buy rating at investment firm Susquehanna. From our perspective, the former represents more confirming data points behind our thesis on OLED shares, and we certainly love it when a member of the Wall Street herd catches up to what we’re doing over here at Tematica.
Now let’s get to that Apple chatter… The Korean Herald is reporting that Samsung has signed an agreement with Apple to provide 160 million screens for the Apple iPhone 8. Keep in mind that Apple shipped 211 million devices last year and 231 million in 2015. This means Apple could be moving more quickly to the new screen technology than previously thought — a positive for our OLED shares given that Samsung is one of Universal Display’s key customers and licensees.
Also dropping today was a new report from Bloomberg saying Apple is considering Chinese company BOE Technology as a potential organic light emitting diode supplier for “upcoming iPhones.” With BOE currently building two organic light emitting diode facilities in the China province of Sichuan, odds are any potential supply to Apple will be for 2018. Given supply constraints for organic light emitting diode displays that could limit Apple’s use of the technology in one new version of the iPhone this year, we’re not surprised by Apple trying to lock up additional capacity ahead of it coming online. More organic light emitting diode capacity is likely to translate into more chemical sales for Universal Display and bode well for greater licensing revenue as well.
- We continue to rate OLED shares a Hold and our $68 price target is under review.
We’ll be tuning into semiconductor capital equipment company Applied Material’s (AMAT) December quarter earnings conference call to get the latest view on organic light emitting diode industry capacity expansion plans.
