Continue Reading Below
Shares of Universal Display Corporation (NASDAQ: OLED) climbed 12% on Wednesday after Deutsche Bank analyst Sidney Ho initiated coverage on the OLED specialist with a "Buy" rating and $135 per-share price target. That's a nearly 22% premium from yesterday's closing price.
To justify his optimism, Ho noted that Universal Display is a "pure play" in one of the market's fastest-growing tech segments. He also argued that investors are underestimating multiple aspects of the company's growth story.
For one, Ho says, the size of OLED displays is increasing -- a likely reference to both larger OLED smartphones from multiple manufacturers, as well as the ongoing ramp-up of OLED TV production from Universal Display customer LG Display. In addition, Universal Display investors can look forward to seeing customers adopt new products, including its new blue phosphorescent OLED emitter materials. If that wasn't enough, Ho also reminded investors that Universal Display is poised to benefit from both the permeation of OLED in the Chinese smartphone market and the widely expected introduction of Apple's first OLED iPhone in September.
Continue Reading Below
To be fair, this shouldn't be surprising considering supply chain rumblings have long served as a precursor to the adoption of Universal Display's flagship technology in Apple's most popular product line. On the emitter front, Universal Display also raised eyebrows a year ago by acquiring contract research organization Adesis, then followed by significantly expanding Adesis' available workspace with the goal of fostering its growing OLED material product portfolio.
In any case, Ho concluded that over the longer term, OLED display adoption should accelerate over the next two to three years. And with Universal Display standing tall as a central pillar of that acceleration, I agree that the stock has plenty of room to rise from here.
10 stocks we like better than Universal Display
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Universal Display wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of August 1, 2017