February 23, 2012 9:36 AM EST KeyBanc is reiterating its Buy rating on shares of Universal Display (NASDAQ: PANL) and is increasing its price target from $45 to $60 following meeting with several of the companies who supply PANL in Korea.
The firm notes they walk away from the meeting more confident in the company's near and long-term prospects and now sees even more upside to its 2012 sales guidance.
Market checks in Korea indicated LG and AUO are making solid progress with their OLED offering. This increases the firm's confidence in the both the timing of the OLED adoption and when PANL will begin signing long-term contracts with companies.
An analyst at KeyBanc comments, "With 1,200 OLED related patents issued or pending, key competitors we talked with acknowledged that they can’t legally commercialize phosphorescent emitter material. Even competitors who are publicly challenging PANL’s patents in Korea concede that there is little they can do over the next several years, even if the courts rule in their favor"
For FY11 and FY12, the firm forecasts EPS will total $0.00 and $0.66.
Samsung admits that tablet sales have been slow but is counting on the Galaxy Note (5.3" screen). They are expecting 10 million unit sales for the Note. The expansion in displays sizes has been a big positive for PANL.
Universal Display Corp (NASDAQ: PANL) reported Q4 EPS of $0.12, versus analyst estimate of $0.06. Revenue for the quarter rose 73% to $18.7 million versus the consensus estimate of $17.83 million.
Last year, the company posted an operating loss of $210,000 and a net loss of $5.3 million, or $0.14 per diluted share, on revenues of $10.8 million.
Material sales were $10.8 million for the quarter, up 47% compared to $7.4 million for the fourth quarter of 2010, primarily due to increased material sales under commercial agreements. Royalty and license fees were $5.4 million for the quarter, up 207% compared to $1.8 million for the fourth quarter of 2010, due to $5 million in license payments from a large customer during the quarter.
"Strong demand for both our proprietary materials and technology sustained the momentum in our business, led to another quarter of top and bottom line growth, and lifted the company to its first ever full year profit," said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display.
Yes, their reticence to give clues as to license fees stops them from giving lots of other information. The lumpiness of those fees will allow us to figure it after a few lumps. It was also annoying that they didn't want to give any break down of the split between host and emitter sales.
I thought I heard something about a 16.5% withholding tax on Samsung's IP payments. I must have been mistaken - that would make the payments easy to calculate.
It was reassuring to hear that Samsung is buying more than the minimum of material required by the contract. Except that the contract was probably written assuming no host sales, so the minimum might be a low bar.