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The field of organic light emitting diode (OLED) technologies and materials may be a huge market in the years ahead. The use of OLED in flat panel displays and solid-state lighting could grow exponentially. Universal Display Corp. (NASDAQ: OLED) has been considered one of the de facto winners here. The company has been public for many years, but until 2015, revenues remained under $200 million per year.

With so much interest in Apple Inc. (NASDAQ: AAPL), one strategy investors use to win off of Apple is to invest in the companies that either are Apple’s top iPhone component suppliers or the companies that could be Apple’s next top suppliers. Universal Display might be one of those winners.

However, there are some serious risks to consider in Universal Display and emerging technologies. This stock has been public since before 2000 and has been range-bound mostly from $30 to $55 over the past five years. Its $2.5 billion market cap also gives Universal Display a massive valuation of about 13 times past sales and 100 times trailing earnings.

That being said, Universal Display is expected to grow sales 15% in 2016 and 25% in 2017, with estimates at $275 million in 2017 on earnings of $1.13 per share for 2016 and $1.68 per share for 2017, rising to $326 million in 2018 and $2.15 in 2018.

So, the reason Universal Display may be a huge winner here may stem from a Cowen upgrade of Apple. That upgrade was based on the move into OLED technology for its iPhone 7 or for phones beyond 2017. Universal Display was not a feature of Wednesday (March 30), but Cowen did feature Universal Display with an Outperform rating on March 21 — and it raised the price target to $65 from $58 in that call.

Before thinking the reference above on valuations and 2018 to 2019 is too far, note that Cowen’s March 21 report is based on the firm’s valuation of 22 times 2019 per-share earnings estimate and then discounted for three years. We must also consider that Cowen had a $70 prior price target on Universal Display before dropping it to $58 back in February.

When Cowen raised its price target in March, the most focus was on LG’s March 17 announcement of a new Gen 5 (1,000 × 1,200 mm, 39.4 × 47.3 inch) facility with initial capacity of 15,000 per month. The Cowen investment thesis said:

Universal Display is a leader in Organic LED (OLED) display technology, deriving high margins from technology licensing and materials sales. Multi-year license and supply agreements with Samsung and LG validate the technology. OLEDs are shipping in high volume in smartphones and other small/medium sized display applications. OLED TV, flexible displays, lighting, advanced encapsulation and deposition technology should be L-T drivers.

The Cowen report also cited forthcoming catalysts for its bullishness on Universal Display as follows: Apple iPhone supply deals; LG OLED TV volume ramp; Samsung new phones, larger displays; and New mobile and wearable products and OEM customers.

When we looked elsewhere for top analyst or boutique research firms covering Universal Display we found the following.

Gabelli rates Universal Display at Buy and its private market value is cited as $60 for 2018 estimates. Gabelli called it a multiyear industry expansion company. Gabelli’s report did comment on Apple and potential expansion:

Superior display performance and low energy consumption of OLED displays continue to gain increasing recognition and favorable reviews. Speculation that Apple will consider OLED displays for its future iPhone in 2017-2018 continues to grow. We are taking a cautiously optimistic view on Apple iPhone’s potential adoption as it will require huge industry capacity that still does not exist today and there is always a risk of delays in making viable mass commercialization of new display technology… Universal Display can further expand its production capacity at its secondary production site in Ohio. It may take 16 months to build out new capacity.

Summit Research, which had a Hold rating (with a mere $40 target price) after March’s earnings report was more cautious. It said:

Our thought is that other than a flexible phone model option from Apple, Apple is also trying to get both LCD and OLED display makers to compete towards reduced power consumption. LG is constructing new P10 fab for 2018, Samsung announced a $3.3B capex fab for 2017 production and potentially BOE, Japan Display and AUO should enter into UDC’s customer mix for 2017-18. As LG is increasing its OLED TV output, we also expect Samsung to re-enter the OLED TV market.

Investor’s Business Daily said on March 30 that Universal Display was one company benefiting from speculation that Apple will move to OLED, but it said that Apple probably would have to source OLED screens from rival Samsung in the near term — with other possible OLED suppliers like LG Display and Japan Display.

Oppenheimer put out a report for Apple that hinted at OLED technology in the upcoming iPhone models. It said:

We expect excitement to return as we predict 360 capture to be introduced for the iPhone, an OLED display, deeper Siri integrations, Apple’s first IoT device for the home, and a mobile VR headset.

In the past, Universal Display has been somewhat of a short seller battleground stock. Its short interest has ticked lower to around 3.2 million shares, but it was over 7 million shares earlier in 2015.

Lastly, investors need to consider one thing (or a few things) about the gains and would-be losses from landing Apple as a top customer. Some of these issues and risks that are very serious are as follows:

• Apple is a very smart and very demanding customer for its suppliers.
• Apple generally does not allow its suppliers to formally announce that they have a deal with the company.
• Apple also does not like suppliers to use its name for sales branding.
• Apple is known for going into a company, getting a supply deal and looking for ways to drive down the price even further, sometimes forcing suppliers to take lower profit margins than they have been used to.
• Apple is not always into exclusive deals, so a potential win for one supplier might also be a win for that supplier’s competitors — and maybe a larger win elsewhere.
• Apple historically has had no qualms about firing suppliers or switching suppliers if they cannot keep up with demand or for a myriad of other issues.
• Apple has been known to in-house certain efforts in technology (think processors, glass, software and the like).
• Apple suppliers are known for having huge hits when they land Apple deals and are the known to have huge misses when Apple pulls the rug out from under them or changes to other suppliers.

Universal Display is obviously a risky company, and it comes with very high valuations that investors have to pay now. It seems to be benefitting from at least some speculation about Apple already, and it remains to be seen if the company could or would be a winner if Apple moves to OLED screens.

Universal Display was not listed as a supplier by Apple a year ago, and we will have to see if Apple lists the company in April as a 2016 supplier in the coming weeks. It should also be noted that the Universal Display annual report for 2014 did not include Apple in its list of top customers.

Wednesday afternoon, March 30, Universal Display shares were up 3% at $54.40. Its 52-week trading range is $32.47 to $57.93, and its consensus analyst price target is $52.67.