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1. Company Snapshot

1.a. Company Description

Universal 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.

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1.b. Last Insights on OLED

Universal Display Corporation's recent performance was negatively impacted by its Q3 earnings miss, with lower material sales and royalty fees weighing on results. The company's quarterly earnings of $0.92 per share missed the Zacks Consensus Estimate of $1.19 per share, and revenues declined year-over-year. Management noted that sales appeared to have been pulled forward in Q2, contributing to the sharp decline. Additionally, the company's acquisition of OLED patent assets from Merck KGaA, Darmstadt, Germany, may not provide immediate benefits.

1.c. Company Highlights

2. Universal Display's Q3 Earnings: A Strong Innovation Engine

The company's third quarter revenue was $140 million, with operating profit of $43 million and net income of $44 million or $0.92 per diluted share. The revenue decline was attributed to timing dynamics, as customer pull-ins in the first half of the year were more significant than previously thought. The actual EPS came out at $1.41, beating estimates of $1.18. Based on current forecasts, the company now expects full year revenues to be around the lower end of its guidance range of $650 million to $700 million.

Publication Date: Nov -11

📋 Highlights
  • Q3 Financials Below Prior Year:: Revenue declined 13.6% YoY to $140M, with operating profit at $43M and net income of $44M ($0.92/share).<br><b>Full-Year Revenue Guidance Revised:</b> Now projects $650M–$700M, citing lower-than-expected H1 pull-in effects and weaker H2 performance.<br><b>Patent Acquisition for OLED Growth:</b> Agreed to purchase $50M in Merck’s OLED patents, expected to close in January 2026 to boost next-gen OLED efficiency.<br><b>OLED Market Expansion:</b> OLED IT unit demand surging with 170% projected growth, signaling a multiyear CapEx cycle as OEMs adopt IT product portfolios.<br><b>2025 Material-to-Licensing Ratio:</b> Anticipates 1.3:1 ratio, with Q3 material sales at $83M (flat YoY) and green emitters driving $65M in sales.

Innovation and Growth Prospects

The company's innovation engine is stronger than ever, with a powerful artificial intelligence and machine learning platform transforming how new materials are discovered and developed. This capability is identifying breakthrough compositions faster, reducing development cycles, and expanding the frontiers of phosphorescent OLED. The definitive agreement to acquire OLED patent assets from Merck KGaA, Darmstadt, Germany, valued at $50 million, bolsters the building blocks for next-generation OLED performance and accelerates the company's road map for high-efficiency devices.

OLED Industry Expansion

The OLED industry is entering a dynamic phase of expansion, primarily fueled by increasing demand for OLED and IT applications. OLED units are projected to grow across the consumer landscape, with OLED IT units expected to increase by 170%. The company believes this is the beginning of a multiyear OLED CapEx growth cycle as leading OEMs expand their adoption across their portfolio of IT products. With a growth trajectory expected to change in 2026, new capacity coming online and new product categories contributing to growth, the company's prospects look bright.

Valuation Metrics

With a P/E Ratio of 23.28, P/B Ratio of 3.32, and P/S Ratio of 8.59, the company's valuation metrics indicate a premium pricing. However, with an ROE of 14.87% and ROIC of 11.6%, the company's profitability metrics are strong. Analysts estimate next year's revenue growth at 10.6%, which may justify the premium pricing. The EV/EBITDA ratio of 18.56 suggests that the company's enterprise value is reasonable relative to its EBITDA.

Guidance and Outlook

The Q4 guide is expected to be a record, with revenue slightly north of $172 million. The company is confident in the growth prospects for the fourth quarter, driven by forecasts from customers on an ongoing basis. The LG display contract is up for renewal at the end of the year, and the company is in dialogue with LG Display about a new contract. As the company moves forward, it expects to see increasing demand for its materials, driven by the growing adoption of OLED displays across its product portfolio and in the smartphone market, particularly in foldables.

3. NewsRoom

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Universal Display Corporation (NASDAQ:OLED) Given Consensus Recommendation of “Moderate Buy” by Brokerages

Dec -04

Source: defenseworld.net

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Universal Display Corporation Earns Spot on Newsweek's America's Most Responsible Companies 2026 List

Dec -03

Source: businesswire.com

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Creative Planning Purchases 2,239 Shares of Universal Display Corporation $OLED

Nov -24

Source: defenseworld.net

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Universal Display: Dip Looks Temporary, The Real Cycle Is Ahead

Nov -19

Source: seekingalpha.com

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Why Universal Display (OLED) International Revenue Trends Deserve Your Attention

Nov -17

Source: zacks.com

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2 Top Dividend Stocks I Plan to Buy Even More Of in November

Nov -16

Source: fool.com

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Aviva PLC Has $479,000 Position in Universal Display Corporation $OLED

Nov -14

Source: defenseworld.net

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Universal Display Corporation Announces Participation at Upcoming Conferences

Nov -13

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.27%)

6. Segments

Organic Light Emitting Diode

Expected Growth: 10.93%

Universal Display Corporation's Organic Light Emitting Diode (OLED) growth is driven by increasing adoption in premium smartphones, expanding use in TVs and wearables, and rising demand for energy-efficient displays. Additionally, partnerships with leading OEMs, continuous R&D investments, and growing presence in emerging markets contribute to the 10.93% growth.

Royalty and License Fees

Expected Growth: 11.7%

The 11.7% growth in Royalty and License Fees from Universal Display Corporation is driven by increasing adoption of OLED technology in premium smartphones, growing demand for OLED TVs, and rising patent licensing revenue from major display manufacturers such as Samsung and LG.

Contract Research Services

Expected Growth: 11.7%

The 11.7% growth in Contract Research Services from Universal Display Corporation is driven by increasing demand for OLED displays in smartphones and TVs, expansion into new markets such as automotive and virtual reality, and rising adoption of OLED technology in emerging markets.

7. Detailed Products

OLED Emitters

Organic compounds that emit light when an electric current is applied, used in OLED displays

Phosphorescent Emitters

Organic compounds that emit light over a longer period of time, used in OLED displays

Host Materials

Organic compounds that help to stabilize and transport electrical charge in OLED displays

Transport Layer Materials

Organic compounds that help to transport electrical charge in OLED displays

OLED Display Panels

Complete OLED display panels used in various applications

OLED Lighting

OLED-based lighting solutions for general lighting applications

8. Universal Display Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Universal Display Corporation is medium due to the presence of alternative technologies such as LCD and OLED. However, the company's proprietary OLED technology provides a competitive advantage.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of Universal Display Corporation's products and the lack of alternative suppliers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of multiple suppliers for raw materials and components. However, the company's dependence on a few key suppliers for critical components increases their bargaining power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the OLED industry, including significant capital expenditures and technological expertise.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of established competitors such as Samsung and LG, and the ongoing competition for market share and technological advancements.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 4.92%
Debt Cost 3.95%
Equity Weight 95.08%
Equity Cost 11.16%
WACC 10.81%
Leverage 5.18%

11. Quality Control: Universal Display Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Skyworks Solutions

A-Score: 4.9/10

Value: 4.6

Growth: 4.3

Quality: 6.8

Yield: 6.0

Momentum: 2.0

Volatility: 5.3

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Amkor Technology

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Universal Display

A-Score: 4.2/10

Value: 1.2

Growth: 6.6

Quality: 8.6

Yield: 2.0

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Volatility: 5.3

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Veeco Instruments

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Value: 3.0

Growth: 5.9

Quality: 5.9

Yield: 0.0

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MACOM Tech

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Quality: 3.5

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Vishay

A-Score: 3.8/10

Value: 7.5

Growth: 1.9

Quality: 2.7

Yield: 4.0

Momentum: 3.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

121.3$

Current Price

121.3$

Potential

-0.00%

Expected Cash-Flows