This article presents an outrageously optimistic scenario for Universal Display. The OLED market can grow 36X compared to 2013 (unlikely, but possible!). If this happens, Universal Display's stock price will be 20 times higher than today. Yes, this is a wild forecast for 2018. But it's a possible one.
As we said, UDC will have a profit of $2.1 billion in 2018. There are 46.5 million shares outstanding as of the end of 2013, so this means an EPS of $45. The company has already generated a huge cash pile of $2 billion by 2018 (even after several acquisitions), or $40 per share. Assuming a P/E of 15, UDC's share price is $40 plus $45 x 15, or$715. That is over 20 times higher than the stock price today.
Note about P/E: UDC's current P/E ratio is about 18. If this scenario plays out, it means growth rate has been phenomenal, and the P/E ratio should go up. On the other hand, by 2018 the P/E may decline due to patent expiration, concerns over further growth and market saturation. So I used a P/E of 15 in my calculations.
If you're a UDC long, this is my highest scenario. I'll say this one last time - I'm sure that my estimates are too high, don't take this forecast seriously. But then again, why not be optimistic for a change? Didn't I say this is going to be fun?
Oh, and one final request - please do not quote this article in 2018 as it might be embarrassing for me... unless of course, I was spot on.
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