Universal Display Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Universal Display (NAS: PANL) surged more than 30% in early trading after news broke yesterday that Samsung had signed a six-and-a-half-year supplier contract with the company.

So what: For years, Samsung had been hedging its bets by signing only three-month extensions. Now, Universal Display can more confidently plan production of OLED technology for use in Samsung screens.

Now what: The deal is also apparently better. Rather than per-unit royalties -- a common risk-reducing measure in the early stages of a supplier relationship -- Universal Display will now be paid an upfront license fee. The implication? The company's OLED technology has proven itself. Don't be surprised if LG Display (NYS: LPL) and peer manufacturers agree to similar terms. Do you agree? Would you buy at these levels? Weigh in using the comments box below.

Interested in more info on Universal Display?Add it to your watchlist.

At the time this article was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim'sportfolio holdingsandFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.Motley Fool newsletter serviceshave recommended buying shares of Universal Display. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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