China Deal Results in Bull Notes for OLED Stock

Deutsche Bank and Susquehanna expect Universal Display to get back to record-high territory

Dec 8, 2017 at 10:03 AM
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Universal Display Corporation (NASDAQ:OLED) is trading 7.3% higher at $179.60, after the company inked a deal with China's BOE Technology to develop and supply organic light-emitting diode (OLED) technology. Analysts like the arrangement, as Deutsche Bank and Susquehanna raised their respective price targets to $190 and $195, and Cowen weighed in by saying it believes 2018 should be another strong year for OLED technology.

OLED stock has had a huge year, tripling in value on a year-to-date basis. The shares peaked at a record high of $192.75 on Nov. 24, only to pull back to find support a few points above their 50-day moving average. Considering this technical strength, it would seem there's room for even more bullish analyst attention. For instance, the majority of covering brokerage firms actually have just "hold" ratings in place, and the average 12-month price target sits down at $178.75.

Elsewhere, short sellers are starting to take interest in Universal Display stock. In the last reporting period alone, short interest rose by 18.1%, and now represents almost 10% of the equity's total float.

As for options traders, they've remained committed to calls. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 1.94, meaning call buying has almost doubled put buying. Peak open interest resides at the January 180 call.

The stock has certainly rewarded premium buyers over the past year, based on its Schaeffer's Volatility Scorecard (SVS) of 88. This means the shares have tended to make bigger-than-expected moves over the past year, compared to what options traders were pricing in.


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