The annual results for Universal Display Corporation (NASDAQ:OLED) were released last week, making it a good time to revisit its performance. Revenues of US$405m were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$2.92, missing estimates by 6.2%. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Following the latest results, Universal Display's eight analysts are now forecasting revenues of US$452.4m in 2020. This would be a solid 12% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to increase 7.5% to US$3.14. Before this earnings report, analysts had been forecasting revenues of US$499.4m and earnings per share (EPS) of US$3.96 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a pretty serious reduction to earnings per share estimates.
Analysts made no major changes to their price target of US$214, suggesting the downgrades are not expected to have a long-term impact on Universal Display's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Universal Display analyst has a price target of US$250 per share, while the most pessimistic values it at US$148. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Universal Display's past performance and to peers in the same market. We would highlight that Universal Display's revenue growth is expected to slow, with forecast 12% increase next year well below the historical 16%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 9.0% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkUniversal Display will grow faster than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Universal Display. Unfortunately analysts also downgraded their revenue estimates, although industry data suggests that Universal Display's revenues are expected to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Universal Display analysts - going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Universal Display Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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