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Stifel's Patrick Newton, hiking his Coherent (COHR +3.2%) target by $18 to $100: "Our research indicates the Apple (NASDAQ:AAPL) supply chain is ramping for OLED production across its portfolio, likely in the 2018 timeframe, requiring a significant investment in OLED hardware, including Coherent’s Excimer Laser Assembly (ELA) Linebeam products." His FY16 (ends Sep. '16) and FY17 EPS estimates have been respectively hiked by $0.15 and $0.20 to $4.40 and $5.25; consensus is at $4.44 and $5.07.
- Newton: "We note technologies that use Coherent’s solution, specifically low temperature polysilicon (LTPS), has significantly higher share in OLED production relative to LCD. Our research indicates benefits from the OLED shift extend beyond hardware with the higher utilization of laser discharge units (LDUs) increasing the company’s service revenue relative to LCD, all else equal." He also observes Coherent's OLED-related laser sales carry higher margins than its LCD-related sales.
- The note comes five weeks after Coherent reported (along with FQ1 results) strong OLED-related orders for its Linebeam laser systems, and forecast the orders would continue through 2017. It also follows multiple reports indicating Apple plans to use OLEDs in future iPhones - the Nikkei reported of a 2018 ETA.
- Universal Display (OLED +5.1%) is going in the same direction as Coherent, much as it did after Coherent's FQ1 report. Shares have more than recovered the losses seen after Universal posted a Q4 miss and issued light 2016 guidance on Feb. 25.