Over the last couple of days, investors have had a lot to follow. Berkshire Hathaway's (BRK-B) annual meeting always generates some headlines and this year is no exception, with news about them buying shares of Amazon (AMZN) and the company’s involvement in the deal between Occidental (OXY) and Anadarko (APC) grabbing some headlines.
Then this morning, we saw another blowout jobs report, even as earnings continue to come thick and fast.
In all this it is easy to lose sight of some of those earnings releases, but in one case that would be a mistake.
The Nasdaq listed Universal Display (OLED) released their quarterly report yesterday, and even in a crowded news cycle, it stood out.
Everywhere you look in this earnings release there are impressive numbers. Revenue grew over 100% to $87.8 million, significantly better than the consensus estimate of $61 million. That translated to Earnings per Share (EPS) that also blew estimates out of the water, coming in at $0.66 versus the expected $0.31. In addition, the company raised their year-end revenue forecast to way above what analysts were anticipating.
That is basically the trifecta of positive news in an earnings report, so it should really come as no surprise that the stock surged in after-hours trading yesterday:
If that chart makes you think that you missed the boat on OLED, then think again. As remarkable as this report was, the real story was in the news release that accompanied it, where CEO Sidney Rosenblatt laid out the firms’ future prospects.
As their ticker symbol would suggest, Universal is a leader in the field of organic light-emitting diodes, or OLEDs, and demand for their products is increasing exponentially as OLEDs become, as Rosenblatt put it “the display technology of choice for premium smartphones and TVs”. That certainly explains the great Q1 results, but what investors should be focused on is something else mentioned in that press release.
It may seem strange to say this after the disaster of Samsung’s Galaxy Fold, but Rosenblatt predicted that at some point, foldable phones are going to take off. Despite Samsung’s issues, the logic of that is hard to argue with. Consumers are increasingly demanding larger screens on mobile devices as they watch more streaming content, but as our phones grow, our pockets basically stay the same size. Something has to give.
New technology, particularly when rushed to market, nearly always has initial problems, and Apple (AAPL), for one, has always recognized that. They are criticized in some quarters for not being innovative enough themselves, but time and again, we have seen the advantages of letting others make the initial mistakes, learning from those, and releasing a product that may not be first, but is arguably the best.
Given that history, it is not too much of a stretch to say that a foldable phone from Apple is quite likely imminent. That would give a significant boost to a mobile phone industry that seems for now to have plateaued, and therefore to suppliers like OLED.
Very often, after a move as big as we saw in OLED yesterday that comes as a reaction to news, the best strategy is to fade that move as markets tend to overshoot. In this case though, while you may see a small pullback today, Universal Display stock looks set for further gains, and has the capacity to deliver for a long time to come.
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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Martin Tillier
Martin Tillier spent years working in the Foreign Exchange market, which required an in-depth understanding of both the world’s markets and psychology and techniques of traders. In 2002, Martin left the markets, moved to the U.S., and opened a successful wine store, but the lure of the financial world proved too strong, leading Martin to join a major firm as financial advisor.
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