This Tech Holding Is Under Pressure, Presenting a Buying Opportunity

Despite reporting September quarter EPS of $1.40, up 30% year over and a figure that simply trounced the $1.19 consensus, our shares of Universal Display OLED are under pressure on Thursday morning.

That pressure stems from the company revising its 2024 revenue to $625 million to $645 million versus its June quarter forecast of $645 million to $675 million. While that revision still puts Universal’s 2024 revenue up between 10% to 14% compared to 2023, the match puts current quarter revenue between $140 million to $160 million. That’s somewhere between flat with the September quarter and down about 13% sequentially, and that bucks the typical seasonal trend we tend to see.

While the management team cited a number of positive factors similar to the ones we’ve shared with you about organic light-emitting diode adoption over the medium- to longer term, the reason cited for the December quarter revenue revision was lower customer forecasts.

Universal did not get more granular in its comments than that but they did come off our discussion about current quarter guidance from Qorvo QRVO and comments early this morning from Samsung SSNLF that smartphone demand is “sluggish.” As part of its overall outlook for the current quarter, Samsung shared that it sees the smartphone market growing in the current quarter led by double-digit flagship and premium models but with “intense” competition in the lower tier or mass market for smartphones. The net effect has Samsung seeing sequential growth in the smartphone market with further gains in 2025 driven by AI devices and foldables. When it comes to the adoption of foldables, we like it rather a lot, given the positive implications for organic light-emitting display demand and Universal Display.

In reviewing Samsung’s comments, they skew positive for Universal Display, given the higher attach rate of organic light emitting diode displays with flagship and premium models, but also for Apple’s AAPL and its iPhone Pro models that carry higher average selling prices. Reading between the lines, Universal may be using the “sluggish” market comments to reset the bar for its December quarter. We’ll have a better sense following Apple’s earnings on Thursday night and Qualcomm’s QCOM earnings next week.

Putting all of this together, we see this as a bump in the road for our shares of Universal Display, and in hindsight, the pressure we are seeing in the shares on Thursday morning is likely to be viewed as an overreaction. Our focus for Universal and its share remains on the wider adoption of organic light-emitting diode technology in multiple markets (TV, PC monitors, tablets, auto) and further penetration in the smartphone market. This was captured rather clearly during Samsung’s earnings call on Thursday morning with the comment that the penetration rate for organic light-emitting diode displays will continue to rise in the smartphone market as more new smartphone models are released. To that, we can add reports that Apple’s entire smartphone lineup will use this display technology starting this year. That combination gives us little reason to alter our long-term price target of $250 for OLED shares.

We could be an outlier on that front, and price target trimming by others is likely to bring some additional weight on OLED shares today. But based on where they land as the market digests all of this, it may open a window for us to pick up some additional shares for the Portfolio.

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At the time of publication, TheStreet Pro Portfolio was long OLED, AAPL and QCOM.