Universal Display (OLED) AI Stock Analysis

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Universal Display

(NASDAQ:OLED)

73Outperform

Universal Display exhibits strong financial performance with robust profitability and a solid balance sheet. The earnings call highlighted potential growth avenues in OLED technology, but also noted challenges such as declining material sales and tariff uncertainties. Technical analysis presents mixed signals with short-term bullishness and longer-term caution, while valuation metrics suggest the stock may be somewhat overvalued. Overall, the stock is positioned well for growth but faces some market and operational challenges.

Positive Factors

Dividend Increase

A 13% dividend increase underscores UDC confidence in future FCF growth.

Financial Performance

Q1 results were better-than-expected, with revenues up 1% vs. consensus -6%.

Share Buyback

$100M share repurchase program is another positive.

Negative Factors

Market Valuation

The target price has been revised to $162 from $200.

Revenue Outlook

Revenues in 2025 are expected to be down 1% to +8%, well below consensus +10.5% growth.

Sales Estimates

A reduction in sales estimates for the second half of the year is expected to affect earnings momentum.

Universal Display (OLED) vs. S&P 500 (SPY)

Market Cap

$6.68B

Dividend Yield1.16%

Average Volume (3M)864.55K

Price to Earnings (P/E)29.8

Beta (1Y)1.61

Revenue Growth6.13%

EPS Growth4.70%

CountryUS

Employees468

SectorTechnology

Sector Strength67

IndustrySemiconductors

Share Statistics

EPS (TTM)1.35

Shares Outstanding47,526,146

10 Day Avg. Volume855,751

30 Day Avg. Volume864,552

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.91

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit12.23

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$182.14

Price Target Upside26.57% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering7

Universal Display Business Overview & Revenue Model

Company DescriptionUniversal Display Corporation engages in the research, development, and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. It owns, exclusively licenses, or has sole rights to sublicense approximately 5,500 issued and pending patents worldwide. The company supplies its proprietary UniversalPHOLED materials to display and lighting manufacturers, and others. It is also involved in the research, development, and commercialization of other OLED device and manufacturing technologies, including FOLED that are flexible OLEDs for the fabrication of OLEDs on flexible substrates; OVJP, an organic vapor jet printing technology; thin-film encapsulation technology for the packaging of flexible OLEDs and other thin-film devices, as well as for use as a barrier film for plastic substrates; and UniversalP2OLED, which are printable phosphorescent OLEDs. In addition, the company provides technology development and support services, including third-party collaboration and support to third parties for the commercialization of their OLED products. Further, it provides contract research services in the areas of chemical materials synthesis research, development, and commercialization for non-OLED applications. Universal Display Corporation was founded in 1985 and is headquartered in Ewing, New Jersey.

How the Company Makes MoneyUniversal Display Corporation generates revenue primarily through licensing its proprietary OLED technologies and selling high-performance OLED materials to manufacturers of OLED displays and lighting products. The company licenses its UniversalPHOLED technology to major display and lighting manufacturers, enabling them to produce more energy-efficient and effective OLED products. Additionally, Universal Display sells its patented OLED materials, such as phosphorescent emitters, directly to these manufacturers, further driving its revenue. Significant partnerships with leading display and electronics companies, along with a robust patent portfolio, play a crucial role in sustaining the company's revenue streams.

Universal Display Financial Statement Overview

Summary

Universal Display demonstrates strong financial health with high profitability, a robust balance sheet, and solid cash flow generation. The company has increased revenue and maintained high margins, benefiting from a debt-free balance sheet which reduces financial risk. While cash flow growth is modest, the strong conversion of net income to cash provides a solid foundation for future growth.

Income Statement

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The income statement reflects strong profitability with a net profit margin of 34.28% and a gross profit margin of 77.08% for 2024. Both margins indicate efficient cost management, allowing the company to retain a significant portion of its revenue as profit. Revenue growth was 12.36% from 2023 to 2024, showing a positive growth trajectory. The EBIT and EBITDA margins are robust at 36.86%, suggesting solid operational efficiency.

Balance Sheet

The balance sheet is healthy, characterized by a debt-free status as of 2024, which eliminates financial leverage risks. The equity ratio is strong at 88.20%, indicating a solid capital structure where most assets are funded by equity. The return on equity is impressive at 13.74%, reflecting effective use of shareholder funds to generate profits.

Cash Flow

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The cash flow statement shows a significant increase in operating cash flow from $154.78 million in 2023 to $253.74 million in 2024, indicating improved cash generation from core activities. The free cash flow to net income ratio is 0.95, suggesting efficient conversion of profits into cash flow. However, free cash flow growth is slightly negative due to changes in capital expenditures.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
647.68M	576.43M	616.62M	553.52M	428.87M
	Gross Profit
499.22M	441.05M	488.72M	438.53M	343.39M
	EBIT
238.80M	217.19M	267.11M	227.64M	157.53M
	EBITDA
282.94M	260.59M	309.38M	269.61M	194.71M
	Net Income Common Stockholders
222.08M	203.01M	210.06M	184.21M	133.37M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
492.67M	514.12M	577.77M	663.19M	730.01M
	Total Assets
1.83B	1.67B	1.53B	1.47B	1.27B
	Total Debt
19.14M	22.86M	29.04M	27.26M	8.75M
	Net Debt
-79.84M	-69.13M	-64.39M	-284.73M	-621.26M
	Total Liabilities
215.81M	221.74M	257.45M	367.00M	356.51M
	Stockholders Equity
1.62B	1.45B	1.28B	1.10B	912.71M
Cash Flow		Free Cash Flow
211.10M	28.42M	79.61M	147.55M	120.74M
	Operating Cash Flow
253.74M	154.78M	126.81M	191.10M	148.79M
	Investing Cash Flow
-164.41M	-83.29M	-280.74M	-457.75M	391.26M
	Financing Cash Flow
-82.33M	-72.93M	-64.64M	-51.37M	-41.66M

Universal Display Technical Analysis

Technical Analysis Sentiment

Positive

Last Price143.91

Price Trends

50DMA

136.54

Positive

100DMA

142.72

Positive

200DMA

165.65

Negative

Market Momentum

MACD

3.42

Negative

RSI

61.81

Neutral

STOCH

86.95

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OLED, the sentiment is Positive. The current price of 143.91 is above the 20-day moving average (MA) of 127.39, above the 50-day MA of 136.54, and below the 200-day MA of 165.65, indicating a neutral trend. The MACD of 3.42 indicates Negative momentum. The RSI at 61.81 is Neutral, neither overbought nor oversold. The STOCH value of 86.95 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OLED.

Universal Display Risk Analysis

Universal Display disclosed 30 risk factors in its most recent earnings report. Universal Display reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Universal Display Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IDCC	79 Outperform	$5.56B	16.89	50.29%	0.90%	33.52%	109.68%
NVMI	74 Outperform	$5.68B	33.95	21.90%	―	29.83%	33.42%
OLED	73 Outperform	$6.68B	29.78	14.58%	1.16%	6.13%	4.70%
FRSH	70 Neutral	$4.21B	―	-6.85%	―	20.46%	39.37%
LPL	61 Neutral	$2.99B	―	-37.33%	―	17.34%	34.72%
Sector *	60 Neutral	$10.94B	10.37	-6.73%	2.98%	7.75%	-12.61%
AI	53 Neutral	$2.90B	―	-32.07%	―	23.79%	4.10%

* Technology Sector Average

Performance Comparison

OLED

Universal Display

143.91

-25.57

-15.09%

IDCC

InterDigital

211.96

106.70

101.37%

LPL

LG Display

3.09

-0.86

-21.77%

NVMI

Nova

183.52

-9.98

-5.16%

C3ai

23.37

-0.52

-2.18%

FRSH

Freshworks

14.56

0.85

6.20%

Universal Display Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q1-2025)

% Change Since: 1.92%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted several positive outcomes, including revenue and profit growth, strategic advancements in blue phosphorescent OLED, and increased royalty and license fees. However, these were contrasted by declines in material sales, uncertainty due to tariffs, and slightly decreased gross margins. The positive developments appear to be promising for the future, but current challenges present significant concerns.

Q1-2025 Updates

Positive Updates

Revenue and Profit Growth

First quarter 2025 revenue was $166 million, operating profit was $70 million, and net income increased by more than 13% year-over-year to $64 million, or $1.35 per diluted share.

Positive Developments in Blue Phosphorescent OLED

LG Display announced successful verification of commercialization level performance of blue phosphorescent OLED panels, indicating potential future growth and market application.

Strategic Supply Chain and Manufacturing Expansion

Diversification of supply chain and expanded global manufacturing footprint, including a new facility in Shannon, Ireland.

Increased Royalty and License Fees

First quarter royalty and license fees were $74 million, up from $68 million in the prior year.

Adesis Revenue Increase

Adesis's first quarter revenue increased to $6.6 million, compared to $3.7 million in the first quarter of 2024.

Negative Updates

Decline in Material Sales

Total material sales were $86 million in the first quarter, compared to $93 million in the first quarter of 2024. Green emitter sales were $64 million, down from $71 million in the first quarter of 2024.

Uncertainty Due to Tariffs

Increased orders in April potentially due to ongoing tariff developments, indicating uncertainty in future revenue stability.

Slight Decrease in Gross Margins

First quarter cost of sales was $38 million with total gross margins of 77%, slightly down from 78% in the first quarter of 2024.

Company Guidance

During Universal Display Corporation's first-quarter 2025 earnings call, substantial guidance was provided, highlighting various financial metrics and projections for the OLED market. The company reported a first-quarter revenue of $166 million, with an operating profit of $70 million and a net income of $64 million, translating to $1.35 per diluted share. Revenue guidance for the full year was set between $640 million and $700 million. The call also projected growth in OLED smartphones by 6% to 848 million units, OLED IT units by 16% to 27 million units, and OLED TVs by 4.5% to 7.1 million units. Material sales for the quarter were $86 million, including $64 million from green emitter sales and $21 million from red emitter sales. The total gross margins stood at 77%, with operating expenses expected to remain flat year-over-year. The company ended the quarter with $918 million in cash, cash equivalents, and investments, and announced a quarterly dividend of $0.45 per share and a $100 million share repurchase authorization. The ongoing development of phosphorescent blue OLED technology was highlighted, with LG Display's announcement of achieving commercialization-level performance marking a significant milestone.

Universal Display Corporate Events

Executive/Board Changes

Universal Display Expands Board with New Appointment

Positive

Dec 17, 2024

Universal Display Corporation announced the appointment of April E. Walker to its Board of Directors, effective January 1, 2025, expanding the board to 11 members. Ms. Walker, a global leader in the technology industry with over 30 years of experience in AI, cybersecurity, and digital innovation, is expected to enhance the board’s expertise, bolstering the company’s leadership in the OLED ecosystem.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.