Why Universal Display Popped 28% in June

What happened

Shares of Universal Display (NASDAQ: OLED) climbed 28% in the month of June, according to data from S&P Global Market Intelligence, despite a lack of company-specific news. Rather, keep in mind the OLED technologist had largely given up its more-than-20% post-earnings pop in May as the broader markets pulled back (including a 7% drop from the S&P 500) on concerns over a global economic slowdown and escalating trade tensions.

Perhaps it should have been no surprise, then, to see traders piling back in last month as the markets recovered (including a 7% rise from the S&P 500) and trade tensions eased.

Stock market chart on colorful display indicating gains.


So what

That said, Universal Display did hold its annual shareholder meeting on June 20, 2019, and CEO Steve Abramson told investors to expect this year will bring "a return to strong double-digit revenue growth, fueled by new investment plans, new product launches, and new adoptees" of its flagship OLED technology. But the stock was also little changed after the meeting, as those comments largely echoed the sentiment management expressed during its first-quarter 2019 call in early May.

Rather, we should keep in mind Universal Display has been hurt in the past when demand for higher-end smartphones, which are currently its biggest driver of phosphorescent OLED material sales, is crimped. Going forward, the company should see a significantly larger contribution from other OLED-centric products like televisions and lighting. But anything that supports increased sales of OLED products in the meantime -- including healthy consumer confidence and global economic growth -- should serve to support Universal Display's position as a central enabler of the expansion of OLED technology.

Now what

As a refresher, Universal Display also raised its full-year 2019 guidance in May to call for revenue to increase to a range of $345 million to $365 million, or 43.5% growth at the midpoint. So barring a preliminary update on its second-quarter performance between now and its next quarterly report in early August, I suspect the stock will continue to be at the mercy of broader macroeconomic trends.

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Steve Symington owns shares of Universal Display. 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.

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