Update: Universal Display OLED Hits Our Target Fast; What Next?

(Published Sept. 19, 2017)

On Monday, Goldman Sachs raised its price target on Universal Display (OLED) to $161 from $150 while maintaining its Buy rating.

The news was better than just the price target bump as analyst Brian Lee said he sees longer upside in the $178-to-$254 range based on potential earnings-per-share growth of 16% to 66%.

The wide range is due to the potential addition of blue materials to OLED’s product line (it already sells emitters of red and green for display), which would increase revenue yield per smartphone.

Back on Sept. 5, the company also received positive comments on 2018 expectations from analyst Mehdi Hosseini of Susquehanna. Potential upside from China based on the actions of Apple (AAPL) could drive EPS as high as $3.14, pushing 2018 estimates 10% higher, according to the note.

Fundamentally, the story remains very strong and while we may have been conservative with our $144 price target, the stock is up some 28% from our Aug. 13 recommendation.

The prudent move now would be to take some off the table, no less than one-third of the holding, but no more than one-half.

We recommended a similar action to subscribers on Sept. 7 as a prudent hedge.

Additionally, we’d consider a stop around $130 (sell if shares close under $130) with the idea to repurchase them in the $115-to-$120 range should we ever retest that area.

Our aggressive buy range increases to $105 to $112 from $90 to $99.

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