Shares of Universal Display (PANL) are holding up well in a very poor market after the company’s Q3 results last night blew away expectations, and the company expressed confidence it will prevail in recent patent battles.
PANL is up $3.76, or almost 8%, at $53.20. Bulls seems mostly reassured today about both what they learned regarding the company’s deal with Samsung Electronics (SSNLF) to use the company’s organic light-emitting diode material, as well as the company’s upbeat defense of its patent position.
Hendi Susanto, Gabelli & Co.: Reiterates a Buy rating. He’s not yet making any changes to estimates, but he thinks sales of “host materials” could be a “driver” of growth, and Our assumption,adoption of green materials from 20% in 1Q 2012 to 100% by 2Q 2013, may be too conservative.” As far as the matter of patent disputes, and a highly contested ruling in Germany last week, Susanto concludes, “Bottom line, we continue to believe that this current outcome does not affect PANL�s IP portfolio and PANL�s IP portfolio in emitter material is still defensive (barrier to entry for others).”
Darice Liu, Brigantine Advisors: Reiterates a Buy rating and raised her price target to $59 from $56. She raised her 2011 estimate to $61 million in revenue and a 1-cent-a-share loss from a prior $49 million and 20-cent loss. Liu is inclined to accept the company’s characterization that a revised patent filing in the European Union will not have an adverse affect, writing, ” The claims regarding Os (Osmium) are being separated. The broader claims for phosphorescent outside of OLEDs were not upheld, but since PANL is focused on the OLED market, we don�t believe it will impact the Company.” She thinks “new customer relationships will materialize in the next 6-12 months,” and that “the OLED lighting efforts are starting to bear fruit.”
Robert Stone, Cowen & Co.: Reiterates an Outperform rating and a forecasts 20% upside to the market in the next twelve months. Stone raised his estimates for this year to $60.6 million and an 8-cent profit, versus a prior estimate of $46.9 million and a 13-cent loss. “Patent issues appear manageable and additional details around the Samsung contract were released, including initial shipments of green material. We believe the industry is on the cusp of accelerating growth and that PANL is positioned to benefit.”
Not everyone is completely satisfied, however:
Jonathan Dorsheimer, Canaccord Genuity: Reiterates a Hold rating and cuts his price target to $41 from $48. He thinks there are “more questions than answers” following the results. What questions? “Specifically, we are trying to get a better understanding on the size and the dilutive effects of increased host materials as well as the ramifications for existing and future revenue streams given the narrowing of the �238 patent in Europe [...] Given limited details around what we view as significant changes in the business model as well as the uncertain implications from recent IP litigation, our estimates are subject to revision as we do further diligence in the coming weeks.”
James Ricchiuti, Needham & Co.: Reiterates a Hold rating, while revising up his 2011 estimate to $61.3 million in revenue and 10 cents a share in profit, up from $45.6 million and a net loss of 12 cents a share. “esults benefited from a strong license revenue contribution from Samsung in the first quarter since announcing the new 7-year license deal. Management also provided revenue guidance for the first time for both Q4 and 2012, which was toward the upper end of Street expectations. We would expect PANL shares to be up on the strong results. We are maintaining our Hold rating, but would become more constructive on a pullback.”
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