Needham & Company Downgrades Universal Display (OLED) to Hold as 2nd-Half Outlook Cut
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Needham & Company downgraded Universal Display (NASDAQ: OLED) from Buy to Hold and 2nd-half revenue cut.
Analyst James Ricchiuti commented, "We are reducing our rating on UDC to Hold from Buy after Q2 results came in modestly below expectations and mgmt reduced the 2H rev outlook. With the stock having closed yesterday above our target price, we're unable to support the Buy with the latest estimate cut. We believe UDC is uniquely positioned to benefit from the new OLED manufacturing capacity that will begin coming on line later next year; however, the existing capacity is not producing the growth we had anticipated for UDC. Mgmt reduced its 2016 revenue guidance by 5-10%, citing expectations of a less favorable mix of emitter revenue, lower than expected royalty revenues and higher manufacturing efficiencies by its customers, which impacts materials consumption. While we believe these are temporary issues, we now believe these headwinds could carry well into 2017."
The firm is lowering lowering 2016 EPS estimate to $0.90 from $1.05 on revenues of $197.7M from $220.8M. They lower 2017 EPS estimate to $1.35 from $1.65 on revenues of $265M (up 34%).
Shares of Universal Display closed at $70.25 yesterday.
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