Universal Display Cracks On Fourth-Quarter Miss, Coronavirus Warning
OLED display specialist Universal Display (OLED) late Thursday badly missed Wall Street's targets for the fourth quarter. It also warned that business interruptions from the coronavirus outbreak in China would crimp its sales. The Universal Display earnings news sent OLED stock sharply lower in extended trading.
The Ewing, N.J.-based company earned 56 cents a share on sales of $101.7 million in the December quarter. Analysts had forecast Universal Display earnings of 74 cents a share on sales of $103 million. In the year-earlier period, Universal Display earnings were 40 cents a share on sales of $70.1 million.
Universal Display guided to 2020 revenue of $430 million to $470 million. The midpoint of $450 million is below Wall Street's consensus estimate of $496 million. It posted 2019 sales of $405.2 million.
Universal Display makes technologies and materials used in OLED displays for smartphones, televisions and other devices. OLED is short for organic light-emitting diode. It also produces OLED lighting products.
OLED Stock Down In Late Trading
Universal Display stock tumbled 5.6% in after-hours trading on the stock market today. During the regular session ahead of the Universal Display earnings, OLED stock slipped a fraction to 178.77.
Universal Display stock hit an all-time high of 230.32 on Sept. 6. But over the next four weeks, it fell 31% before beginning to recover.
On Dec. 26, OLED stock broke out of a cup-with-handle base at a buy point of 208.11. During the next two weeks it climbed to a recent high of 222.20 on Jan. 9. It then trended sideways before it tumbled on concerns the China coronavirus outbreak would impact its business. That fall triggered the loss-cutting sell rule, under IBD trading principles.
In a Jan. 27 report, Susquehanna Financial Group analyst Mehdi Hosseini said the coronavirus epidemic could impact Universal Display's ability to ship materials into China's Wuhan, a major manufacturing hub. Wuhan is ground zero for the Covid-19 coronavirus outbreak.
OLED stock was under pressure ahead of the Universal Display earnings report. OLED stock has a middling IBD Relative Strength Rating of 52. The Relative Strength Rating measures a stock's 12-month performance on a 1-99 scale against all other stocks.
China Represents About 15% Of Universal Display Sales
Two of the leading Chinese OLED display manufacturers — CSOT and Tianma — have most of their OLED manufacturing facilities in the Wuhan area, Hosseini says. Universal Display is a key supplier of emitter material used in displays built by those companies, he says.
"We estimate about one-third of China's total OLED manufacturing capacity is located in Hubei province, including its capital city, Wuhan," Hosseini said.
China accounts for about 15% of Universal Display's total revenue, Hosseini says.
Universal Display Earnings Report Brings Dividend Hike
Also Thursday, Universal Display announced that it is raising its quarterly cash dividend by 50% to 15 cents a share. Its prior quarterly dividend was 10 cents a share.
The dividend is payable on March 31 to shareholders of record on March 17.
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