Weak Galaxy S4 Sales Hurt Universal Display (PANL) but Downside Risk to EPS Not Meaningful

Goldman Sachs maintained a Buy rating on Universal Display (NASDAQ: PANL) with a price target of $41.00. Korea Tech analyst Michael Bang lowered his smartphone assumptions, especially on the Samsung Galaxy S4. Forecast now calls for 2Q13/3Q13/4Q13 sales of 21mn/19mn/14mn units, down 5%/24%/0%. This led Analyst Brian Lee to adjust his model for Universal Display.

"We believe reduced expectations for the Galaxy S IV are disappointing given Samsung remains PANL's primary customer," said Lee. "While our Korea team's updated forecast of 54mn S IV units would suggest a lack of upside to that range, we note that it also does not suggest meaningful downside to our EPS estimates, which we trim by 2%-5% in 2013-2015 . . . Thus, we see no incremental
risk to PANL's 2013 revenue outlook."

"Additionally, with PANL shares having already underperformed in the past month (-8% vs. RUT flat) – on lackluster S IV data points, in our view – we believe this potential S IV volume weakness has likely been reflected in the stock to a large degree," added the analyst.

For an analyst ratings summary and ratings history on Universal Display (NASDAQ: PANL) click here. For more ratings news on Universal Display click here.

Shares of Universal Display closed at $27.09 yesterday.

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