Personal Finance

Why Shares of Universal Display Tanked 18% Last Month

Line graph with green and red lines moving downward

What happened

Universal Display Corporation (NASDAQ: OLED) saw its shares fall by 18.6% in February, according to data provided by S&P Global Market Intelligence , after the company released disappointing revenue guidance for full-year 2018 that failed to match up with Wall Street's estimates.

So what

Universal Display had a strong fourth quarter of 2017 (reported Feb. 22), with total revenue jumping 55% year over year to $115.9 million. Revenue from the company's material sales skyrocketed 105% year over year to $59.8 million in the fourth quarter.

Additionally, sales from the company's important royalty and licensing business rose by 23% to $53.8 million, up from $43.6 million in the year-ago quarter.

Line graph with green and red lines moving downward

Image source: Getty Images.

Net income also rose to $0.69 per diluted share, up from $0.55 per share in the year-ago quarter. If you back out the effects of the Tax Cuts and Jobs Act, then net income was $0.93 per diluted share in the quarter, or $44.3 million.

But investors focused their attention on the fact that Universal Display's management set guidance for full-year 2018 revenue that fell below Wall Street's consensus estimate for the year. The company's management said that sales for 2018 would be in the range of $350 million to $380 million, which is significantly below analysts' consensus estimate of $398.2 million.

Now what

Investors have been a little more optimistic about the company this month, and have pushed Universal Display's shares up about 2.6% as of this writing. Despite management's light guidance for 2018, Universal Display CFO Sidney Rosenblatt said in a press release that high-volume OLED production should ramp up next year, and that "2019 is poised to be a meaningful year of growth."

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Universal Display. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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